The Fixer: Child savings crisis

Have you been left out of pocket due to poor service or sharp practice? Do you have a money problem that won't go away?

It can seem impossible to get a fair result when you are battling a large, faceless organisation alone. But never fear! The AOL Money Fixer is here to help.


This week, she helps a father concerned about the poor returns on offer from his son's Child Trust Fund.

Dear Fixer,
I opened a Child Trust Fund for my six-year-old son just after he was born. I initially put money - including the Government's contribution - into an investment version with Family Investments.

However, when the recession hit I got scared about a stock market meltdown and moved the fund into a cash account with Nationwide Building Society, which was paying a competitive rate at the time.

Imagine then my disappointment to find when I checked recently that the rate we are getting on my son's nest egg is now just 2.10% - even though we pay in a significant amount each month.

This is much lower than the rate we are getting on my younger son's Junior Isa, but I have been told that I cannot switch the Child Trust Fund to a Junior Isa for my six year old.

This seems very unfair to me. Is there anything I can do?

H Peters, Horsham

Dear Mr Peters,
Unfortunately, you cannot currently switch a Child Trust Fund to a Junior Isa. The bad news for youngsters with Child Trust Funds is also that the number of providers offering them has fallen by more than 10% since they were closed to new savers.

While you can still switch Child Trust Fund providers, the choice is therefore more limited than it was in the past and many of those still offering Child Trust Funds have reduced their rates.

There are calls for a change to the current rules preventing Child Trust Fund savers from transferring their funds to a Junior Isa.

In the meantime, however, most savings experts agree that an investment Child Trust Fund from a respected manager such as F&C Investments is likely to produce better returns - especially those paying as little as Nationwide.

If, on the other hand, you are still unwilling to risk the capital in an investment Child Trust Fund, better interest rates are available from providers such as Yorkshire Building Society, which is currently paying 3% (including a 12-month 0.7% bonus).

The Fixer

Whatever your financial problem, write to themoneyfixer@aim.com and The AOL Money Fixer will get on the case.