BLOG: Four ways grandparents can save for their grandchildren
Grandparents have a number of options when it comes to saving for their grandchildren.
Some options you can set up yourself, and others may need a parent or guardian to set up the account first, which you can then contribute to.
At Foresters Friendly Society, we have different saving plans to help you save for your grandchildren’s future including our award-winning Junior ISA*.
1) Junior ISA
A Junior ISA (JISA) is a tax-free child savings account (for children aged 0-18 years old) designed to help you give your grandchild the best start in life. Junior ISAs must be opened by a parent or guardian, by investing new funds or transferring a Junior ISA or Child Trust Fund, but once opened you can contribute to the JISA by direct debit or lump sums.
The maximum that can be contributed in total is £9,000 in the current tax year.
By opening a savings plan with Foresters Friendly Society, your grandchild will also have access to exclusive Foresters Extras membership benefits at no extra cost, including discretionary grants to help cover the cost of things like higher education or healthcare costs such as dental and optical bills.
Grandchildren can access their savings as soon as they turn 18, at which point their ISA will either continue to be invested as an adult ISA, or the money can be withdrawn.
2) Children’s Tax-Exempt Plan
The Children’s Tax-Exempt Plan allows a parent, guardian or grandparent to open an account.
Provided by the Post Office Insurance Society (POIS) who are a part of Foresters Friendly Society, the savings plan can be opened by setting up a monthly Direct Debit.
You can save £25 a month for between 10-25 years and your grandchildren must be at least 16 years old before they can receive the cash sum.
Your grandchild will also have access to exclusive Foresters Extras membership benefits at no extra cost, including discretionary grants to help cover the cost of things like higher education or healthcare costs.
The plan can be held alongside a Junior ISA or Child Trust Fund and gives your grandchild access to a tax-free cash sum when they need it most.
3) Topping Up Existing Child Trust Funds
If your grandchild already holds a Child Trust Fund with Foresters Friendly Society, you can help contribute to it with monthly payments from as little as £5, or larger one off lump sum top ups from £50, giving you the perfect place to deposit a little extra cash for Christmas or Birthdays.
Child Trust Funds were replaced by Junior ISAs and allow contributions up to £9,000 in the current tax year.
4) Making a Cash gift
In addition to savings accounts you can open or pay into for your grandchild, each grandparent can currently gift up to £3,000 to their grandchild in any one tax year, tax-free.
If you don’t use the entire £3,000 allowance in any single year, the balance can be carried over to the following tax year. However, this cannot then be carried forward for a third consecutive year.
You should be aware that in some investment conditions your child may not get back the full amount originally invested. Also, bear in mind that tax rules may change and depend on individual circumstances. Foresters Friendly Society member benefits are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.
The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.
*Yourmoney.com Investment Awards – Winner – Best Junior Investment ISA 2022.