Information about the Child Trust Fund

As you'll not be receiving advice about the Child Trust Fund you should ensure that it's suitable for your child's future needs and circumstances. Please ensure that you read the Key Features document carefully before applying.

Your funds are largely invested in the stock market. However, unlike a deposit account, the value of the investment in the Tesco Child Trust Fund can fall as well as rise, and profits are not guaranteed.

If you need financial advice and want to find an independent financial adviser in your area, go to www.unbiased.co.uk.

What exactly is the Child Trust Fund?

There are three types of Child Trust Fund. The Tesco Child Trust Fund is a stakeholder account and is described below. There is also a cash fund and a non-stakeholder fund. For more information on these types of account visit the government web site at www.childtrustfund.gov.uk.

The Tesco Child Trust Fund is a Stakeholder account investing primarily in a mixed portfolio of UK equities (companies' shares) and bonds and will only grow if these increase in value. The government has set rules we have to follow which means that your child's money is spread over a range of investments which aim to help reduce risk. Share values can fall as well as rise so future performance cannot be guaranteed and you may not get back your original investment. You should also bear in mind that inflation will reduce the buying power of the money in the fund when it matures.

Potential for higher returns - your child's savings are invested mainly in the stock market so your savings have potential to grow. However, please bear in mind the value of the fund may fall as well as rise and returns are not guaranteed and you may not get back your original investment.

Lower risks than investing only in shares - because the Government rules ensure that your investments are spread.

A tax-efficient way to save - all growth in your Child Trust Fund account is currently free of both income and capital gains tax. The current tax treatment of Child Trust Funds could be amended or withdrawn by the government in the future.

Information about changes and charges

Changes to the account over time...

You can save regularly or you and friends or relatives can top up the account with £10 or more at any time - up to a maximum of £1,200 per birthday year.

When your child turns 13, money invested in shares is gradually moved to lower risk investments to help safeguard any gains made your child approaches 18. No withdrawals can be made from the account before your child turns 18.

Charges to the account

The annual management charge on the stakeholder account is limited to 1.5 percent a year - which means that it can be no more than £1.50 for every £100 in the account. The charges on other types of CTF account are not limited in this way.

Additional payments into the account

Anyone can pay into the account. Parents, grandparents or any other family member or friend can pay money into the account up to a combined total of £1,200 each year. You could set up a Direct Debit to make this easier.

Please note that any contributions made to the Child Trust Fund cannot be returned to the person making the contribution.

Financial Services Compensation Scheme

The Financial Services Compensation Scheme, set up under the Financial Services and Markets Act 2000, covers Child Trust Funds. You may be entitled to compensation from the scheme if we cannot meet our obligations. Child Trust Funds are classified as investment business and are covered for 100% of your claim up to a maximum of £50,000. For more information on the conditions of the scheme, please contact the FSCS at www.fscs.org.uk.