Lloyds TSB Launches Junior Cash ISA at 3% and Calls on the Government to Open Up Accounts to All Parents

MANCHESTER, ENGLAND, February 24, 2012 (Press-News.org) Lloyds TSB today announces that it will offer a Junior Cash ISA, making it the first of the major high street banks to do so.

- Lloyds TSB is the first of the major high street banks to announce a Junior Cash ISA
- Account available from 13th February, meaning parents can take full advantage of the GBP3,600 annual Junior ISA allowance for 2011 / 2012
- New research indicates young adults increasingly reliant on financial support from their parents in their adult life
- Lloyds TSB urges the Government to allow parents to transfer Child Trust Fund accounts to Junior ISAs providing equal choice in the market for all parents

Lloyds TSB today announces that it will offer a Junior Cash ISA, making it the first of the major high street banks to do so. The Lloyds TSB Junior Cash ISA will be available from 13th February 2012, and will be offered at a tax free flat rate of 3% AER.

The Junior ISA is a long-term savings product, which locks away savings until the child turns 18. A key benefit of the account is that parents are able to take advantage of annual Junior ISA allowances, currently set at GBP3,600, to build up a tax free savings pot for their child. When the child reaches the age of 18 their Junior Cash ISA will mature into an Adult Cash ISA, where they can continue to save without paying tax on their existing balance.

Those looking to make the most of the annual limits have until 5th April 2012 to invest for this tax year.

Young adults increasingly reliant on financial support from parents
The Lloyds TSB Family Savings Report indicates that children in the UK are increasingly reliant on parents for financial support: 80% of young adults in the UK now receive some form of financial support from their parents, compared to 61% during the 1980s. Young adults are using parental financial support for day to day living expenses (38%); large purchases such as cars (39%); university costs (31%) and also rent (26%) demonstrating their reliance on their parents' income.

This trend highlights the growing importance of good financial planning early in a child's life, as putting away just a small amount of money each month can really add up. A parent maximising their Junior ISA allowance each year could earn up to an estimated GBP86,000 over an 18 year period, but even investing just half the limit could see a nest egg of an estimated GBP43,000 accrue.

Restricting access for Child Trust Funds is denying parents choice
As part of its commitment to become the best bank for customers, Lloyds TSB with its new Junior Cash ISA recognises the need for parents to have a simple and competitive long-term savings product in which to save for their child's future.

This is why Lloyds TSB is urging the Government to open up the Junior ISA market to all parents and remove the restriction currently in place on those children who were eligible for a Child Trust Fund, i.e. those born between 1 January 2002 and 3 January 2011.

Greg Coughlan, head of savings for Lloyds TSB said:
"Saving for a child's future is increasingly important as more and more young adults are becoming reliant on their parents to fund some of the most basic costs of living. The Junior ISA allows parents to set aside money throughout their child's life in a tax efficient way, building that all important nest egg which could either help fund their university education or help them take that first step on the property ladder.

"We are delighted to be the first of the major high street banks to announce such an account for customers. However, in order for all parents to get the maximum choice of deals, the Government needs to urgently review its policy of restricting access to the Junior ISA for those that were eligible for a Child Trust Fund."

Lloyds TSB conducted its Family Savings report, in association with the Future Foundation. The report looks at household savings trends in the UK, comparing them with some other active savings nations - Germany and China. The report includes new survey research, using a robust sample of adults in each country that was broadly representative by age group, by gender and by household income band. In the UK 1,500 adults aged 18-64 were interviewed, and in China and Germany 750 adults aged 18-64, resulting in a total international sample size of 3,000.

GBP86,820 assuming at the beginning of each year GBP3,600 is deposited and interest rate remains at 3%. Please note this does not take into account inflation

GBP43,410 assuming the same as above but GBP1800 deposited each year

Editors' notes:
Key product information:
- Minimum opening balance GBP1.
- For children under 18.
- Open in branch only.
- Deposits can be made by anyone (annual ISA limits apply) and are treated as a gift to the child and cannot be returned to the donor.
- Interest is paid at a tax free, variable rate. Interest paid annually on 31 March (or previous working day if this falls on a non-working day).
- No withdrawals permitted until the child is 18, except in the exceptional circumstance of the child's death or terminal illness.
- Once the child reaches 18, the account will mature into an adult cash ISA.
- Transfers-in and transfers-out are permitted.
- 14 day cancellation period - if the customer has invested their current year's allowance and decides to cancel, they will not lose their allowance for that tax year and can invest it in another Junior ISA.

For more information contact:
Claire Barratt, Lloyds TSB:
020 7661 4668 / claire.barratt@lloydstsb.co.uk

Siobhan McCluskey, Lloyds TSB:
020 7661 4669 / siobhan.mccluskey@lloydstsb.co.uk

Website: http://www.lloydstsb.co.uk