2nd January 2020 All Posts Guest Blog

Introducing KidSave

The simple and flexible account to build up savings for your child’s future – right from the start

  • 73% of parents think their children will have a harder start in adult life than they did
  • 81% of parents believe the government is not doing enough to support families with children’s savings
  • Poor perception of and confusion over child savings products key barriers to opening a child’s investment account

When it comes to children’s savings, an overwhelming 81% of parents believe the government is failing families by providing inadequate support to help them prepare financially for their children’s futures. That’s according to data released today from leading shopping loyalty programme, KidStart, and follows recent research*1 which suggests around 2 million Child Trust Funds (CTF) worth £2.5bn have been completely forgotten about.

To help parents save for their children with ease and at low cost, KidStart is launching ‘KidSave’, a pioneering no minimum commitment stocks and shares Junior Individual Savings Account (Junior ISA or JISA). KidStart helps its members with money back on their shopping in the form of allocations to saving accounts for their children, while they shop at more than 2,300 retailers across categories ranging from department stores to online groceries, family holidays to fashion and more.

Introduced in the UK eight years ago to replace the CTF*2, Junior ISAs can be complex to understand and expensive, leading to low uptake. CTFs and JISAs are held by an estimated six million children *3.

KidStart is regulated by the Financial Conduct Authority (FCA), their new KidSave Junior ISA has simple, online processes to both open accounts and track progress. There are no complex choices or confusing language: just a clear option to select the cash fund or share fund in whatever proportion you choose, which can be altered if desired.

“The child savings market is broken and we’re changing that with our KidSave Junior ISA,” says KidStart co-founder Julian Robson. “Three-quarters (73%) of parents fear their kids will face a tougher start to adult life than they did thanks to the higher costs of renting, buying property and rising tuition fees. But many parents don’t act on their good intentions and we know that a key reason for this reticence is child savings accounts are often seen as confusing, expensive and, worst of all, poor value,” continues Julian Robson.

With almost half (43%) of KidStart’s survey respondents claiming the inability to commit to a regular payment as a key deterrent to considering an investment savings account for their child, the KidSave JISA with no need to sign up to a regular contribution offers parents the flexibility to top up what they can, when they can. It is also one of the lowest cost (charging 0.5%), no minimum stocks and shares JISA available on the market today.

Parents’ attitudes to risk was another barrier to opening a child investment account with a third (32%) admitting to being more risk averse when it comes to investing for their child compared to investing for themselves. 

With KidSave, members can choose to allocate into two low-cost funds: Fidelity Global Index Fund which tracks the performance of global shares, and Legal & General Cash Trust Fund which tracks money market funds.  Parents choose which proportion of their money goes into which fund, thereby controlling the risk/potential return from the investment. The allocation can be changed at any time. As with all JISAs, the money in the account belongs to the child, but he or she cannot access it until they turn 18.

Furthermore, it’s not only parents who can use KidSave to put money away for the children they love: grandparents, aunts, uncles and friends can contribute to the KidSave JISA just as easily as Mum and Dad. In fact, members using Kidstart regularly could save hundreds of pounds for their child for free with automatic top ups via KidStart shopping savings. Especially when taking advantage of online offers in the lead up to Christmas.

“With KidSave, we are providing an opportunity for everybody regardless of their financial situation, who has a child they care about to help build a nest egg for that kid’s future. We are making children’s saving simpler and more accessible than ever before,” explains Robson.

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About the Author

Established in 2008, KidStart is a free shopping club and loyalty programme that enables parents to save money for their child every time they shop. By making purchases online, shoppers collect KidStart savings, which are paid in cash into the child’s account. KidStart offers money back at a huge range of big-brand family retailers meaning you can do virtually all of your shopping through KidStart’s online partner shops and save while you shop. KidSave is a new JISA launched by KidStart in 2019.