Introduction

Children born since 1st September 2002 benefit from the Government's Child Trust Fund (CTF) scheme, which offers an easy and efficient way to build up a lump sum for them to use at 18. But what if your child is too old to qualify, or you wish to save more than the CTF limits - or you wish to save in the MPFS With-Profits Fund?

There are plans which have the same tax benefits as ISAs and CTFs and these monthly premium Tax-Exempt plans are only offered by Friendly Societies. Provided they are not cashed in before 10 years, there is no tax on the profit. Moreover, under current regulations we do not pay tax on the interest and capital gains, so we can pay higher bonuses than on other long term savings plans.

Anyone - for example a parent, godparent, grandparent, other relative or family friend - can set up a Children's Savings Plan for a child and make the monthly payments; however either the child or the payer ('sponsor') must be closely related to someone who is working or has worked for the police service, and the sponsor should bear in mind they will be entering into a long-term commitment (the minimum term is 10 years).

As a parent or relative you will want to give the child the best opportunities you can. As they get older, things such as going to university and travelling may be more costly than you imagined. The longer you can pay into an investment plan, the greater the potential return should be, so the sooner you start putting money aside for whatever path the child might decide to take, the better.

You, as the sponsor, will need to sign the application form on the child's behalf. If the plan is cashed-in early (before the child is 16), a parent or legal guardian must sign any requests and receive the payout on the child's behalf. Once aged 16, only the child can request and receive any payout.

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