Engage offers new opportunity to save for kids, tax exempt

Engage Mutual Assurance, a leading provider of Child Trust Funds (CTF), has launched a new product to encourage parents to save for older children who missed the CTF deadline.

From early October, Engage will be making its Easy Save product available to children under 16. Junior Easy Save offers the opportunity for parents to invest up to £25 a month tax exempt into Engage Mutual’s successful With Profit fund, which has a history of stability and good performance. With the added benefit of a guaranteed minimum payout (provided all premiums are paid up and the plan has reached the end of the premium payment term) at the end of the savings term, this offers additional peace of mind against market volatility.

The Government’s Child Trust Fund scheme has been attributed with increasing childhood savings and Engage Mutual is also keen to encourage parents to save for those older children who don’t qualify for CTF.

Tax exempt savings of up to £25 a month are available exclusively from Friendly Societies and Engage Mutual sees this as a great opportunity to encourage parents to save more for their children’s future.

Karl Elliott, Marketing Director of Engage Mutual Assurance said: “Engage Mutual is committed to helping families to save little and often for their future. Childhood savings are particularly important given rising costs of university education and living independently in adulthood. Parents who set up savings schemes for their children are not only investing in their future financially, but also helping to educate them in the importance of saving.

“Having listened to our customers’ concerns for children missing the CTF deadline, Engage Mutual is launching our Easy Save product to the whole family. Junior Easy Save is a simple investment which guarantees a minimum payout equivalent to the premium paid out at the end of the savings term. As a Friendly Society, Engage Mutual is in a unique position to be able to offer children’s tax-exempt savings, something we believe is extremely important for future generations. We hope that parents will use Junior Easy Save as a simple trustworthy vehicle to save regularly for their children’s future.”

Junior Easy Save Product Features:

A tax free payout at the end of the premium payment term
Available to all UK residents under 16 years old;
Tax Exempt Savings allowance of up to £25 per month or up to £270 a year
A regular savings vehicle;
Invests in Engage Mutual’s successful With Profit fund;
The minimum savings term of 10 years;
Guaranteed minimum payout (Provided all premiums have been paid and the plan has reached the end of the premium payment term the tax-free payout will be at least equal to the total premiums paid provided the policy is cashed in within 28 days after the end of the premium payment term. The guarantee does not apply if the policy is cashed in outside of the 28 day period)

What might the child get back?

Child aged 6 next birthday:

Savings term: 10 years
Monthly premium: £25
Life cover: £2,250

If investments grew at 5% per year the child would get back £3,260

If investments grew at 7% per year the child would get back £3,590

If investments grew at 9% per year your child would get back £3,960

These figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What the child gets back depends on how the investment grows and on the tax treatment of the investment

The child could get back more or less than this

All firms use the same rates of growth for illustrations but their charges vary

Inflation would reduce what the child could buy in the future with the amounts shown.
Statistics on Child Savings from Engage Mutual’s 3GB Research:

46% of parents with children over the age of 25 still supporting them financially;

Just one in six (17%) single Mums and Dads with children under 16 made regular payments into a child’s savings account in the last ten months, compared to 42 per cent of couples;

The proportion of young parents relying on grandparents to help pay for childcare costs has doubled in the last 9 months from 11% to 21% in the last year;

Single parents are putting aside significantly less than their married counterparts, saving an average of £122 per child under 16 in the last ten months, compared to those married (or living as married) who saved £189 for each of their children.

About the product:

The child’s lump sum depends mainly on investment performance, and is not guaranteed

If the policy is cashed in early, the child is unlikely to get back as much as has been paid in

If the policy is cashed in before one year’s premiums have been paid, the child will not get anything back

Seductions may turn out to be higher than expected

A Market Value Adjust (MVA) may be applied when the policy is cashed in. This would effectively reduce the surrender value

The tax treatment of the fund may change

Past performance is not an indication of future performance

Engage Mutual Assurance can be contacted on 0800 169 4321 or by visiting engagemutual.com.