Our latest insight article looks at Junior ISAs, what they are, what products providers offer, and how members can make contributions.
ISA accounts are a form of tax-efficient savings account where savers do not have to pay tax on any of the interest earnt on contributions of up to £20,000 per tax year.
In an earlier insight article we looked at Cash and Investment ISA accounts and Junior ISA accounts can also be either a cash or investment account.
Junior ISAs (JISA) work similarly to Cash and Investment ISA accounts, except with a JISA the member is saving money for their child.
Any parent of guardian can open a JISA account, but the money belongs to the child. They will be able to take control of the account from age 16 but will not be able to make withdrawals until they turn 18.
The annual allowance for JISA accounts is lower than their adult equivalents. Currently savers can put £9,000 a year into a JISA without paying tax on any interest.
Our data shows that only seven workplace pension provider propositions offer members the option to open a JISA account for their children.
Cushon, Fidelity GPP, Fidelity Master Trust, Hargreaves Lansdown and True Potential all offer their own JISA products.
Standard Life and Standard Life DC Master Trust offer JISA products from Cushon, as like all the other savings products in their range.
However, only Cushon, Standard Life and Standard Life DC Master Trust enable contributions to be made at source via a payroll deduction.
All seven solutions who offer JISA accounts allow the member to make additional payments when wanted, either one-off or instant savings. These payments can be made via the app or portal, with some providers also offering alternative payment methods.
True Potential is the provider to offer the broadest form of savings methods. It is also the only provider to offer members to save into a JISA via rounding up ie. each transaction made from a selected account is rounded up to the nearest pound, with the surplus then added to the JISA account.
Algorithm-based or prediction savings are offered to a JISA by Standard Life, Standard Life DC Master Trust and True Potential. This form of savings method uses AI or machine learning to understand an amount which can be saved based on previous spending and saving behavior.
Currently no workplace pension providers enable their members to save into a JISA via sweeping of surplus income.
Cushon is the only provider to currently enable contributions/additional payments to be made by the employer into the JISA.
Contribution holidays are well supported, with only Hargreaves Lansdown not allowing members the freedom to stop or pause JISA saving during times of difficulty or in months with abnormally high spending.
All seven workplace pension providers who offer JISA accounts to their members will accept a transfer from another ISA account. Most do this via an automated process, but for Fidelity and Fidelity Master Trust the process is a manual one.