The government has announced it will formally consult on ‘lifestyling’ to child trust funds, which currently takes place from the age of 13 and could be moved up to 15, as consultation respondents questioned what value lifestyling had.
Lifestyling is designed to manage volatility in account investments as stakeholder CTFs approach maturity, when the account holder turns 18.
A written ministerial statement from financial secretary David Gauke explained that a number of respondents to the government’s recent consultation on the transfer of funds from CTF to junior Isa questioned the value of lifestyling for many CTF holders.
Mr Gauke wrote: “The government wishes to explore this issue further through consultation with CTF providers, account holders, parents and other interested groups.
“This consultation will take place alongside the government’s changes to the CTF rules that will allow parents to transfer CTF funds to a junior Isa from 2015.”
Mutual organisation Family Investments has welcomed the possible changes, pointing out that lifestyling impacts the generation of the fund’s best possible returns.
Peter Stevens, sales and marketing director at Family Investments, said: “At present lifestyling begins at 13, a full five years before CTFs mature. That equates to 28 per cent of the fund’s lifetime. We think that is excessive and likely will dampen returns, so this is good news.
“Young savers who put their money into stocks and shares are likely going to enjoy a bigger return over cash as it is. However under current lifestyling rules they have less chance of generating the best pot they can to start adult life – the rules simply aren’t geared towards maximising returns.”
