Around six million children will immediately be eligible for a Junior ISA, with a further 800,000 children benefitting each following year. All children under 18 who are UK residents and do not have a Child Trust Fund (CTF) will be eligible for a Junior ISA.
Mr Hoban confirmed that the limit for Junior ISAs would be set at £3,600. To ensure that children with a CTF are not disadvantaged he also confirmed that, from today, the CTF savings limit will treble from £1,200 to £3,600, aligning it with the new Junior ISA limit.
Funds in a Junior ISA will be locked-in until age 18 and roll over into an adult ISA on maturity, meaning that the accounts will help to foster a long-term savings habit among young people.
Mark Hoban said:
"The launch of Junior ISAs is a clear demonstration of the Government’s commitment to encourage saving for children.
"Junior ISAs will be open to all parents, regardless of income. This, together with changes made to Child Trust Funds, mean that parents can save up to £3,600 per year for their child.”
Brian Morris, Head of Savings Policy at the Building Societies Association, said:
"The Junior ISA is a welcome addition to the savings market. Mutuals are well placed to offer them given their expertise in children's savings and being the main providers of cash CTFs.
"We expect many of our members will start offering Junior ISAs next month with others likely to bring these products out early next year.
"Although minus the Government contribution, Junior ISAs are an attractive option for parents. The flexibility to transfer money in both directions between cash, and stocks and shares accounts, is welcome.
"This is not the case for adult ISAs and we'd urge the Chancellor to address this inconsistency in his Autumn Statement."
Graeme McAusland, Chief Executive of The Children's Mutual, said:
"For many families, paying for university, a first step on the property ladder or a first car to get to work, simply isn't feasible out of their monthly salary.
"Yet by saving relatively small amounts regularly, families can make a difference to their offspring's financial futures. Many of our CTF customers have either eligible older children or have had new children this year and want to save to help them into adulthood.
"We believe our Junior ISA will fill the gap left by the closure of the CTF and are delighted that we can continue to support families in their efforts to save."
Half a million babies could miss out on £165m of Junior ISA savings in the next twelve months
Child Trust Fund provider, Family Investments, discovered that awareness remains worryingly low.
Twelve months ago, 91 per cent of parents with children aged under-eighteen had not heard of Junior ISA but today 73 per cent of parents are still unaware of the tax efficient product.
Kate Moore, Head of Savings and Investments at Family Investments said:
"Based on our experience with Child Trust Funds parents contribute an average of £27 a month to the accounts. Applying these figures to Junior ISA, newborn children could miss out on up to £165m within the first year of the new scheme alone.
"In many ways this is just the tip of the iceberg as the Junior ISA is open to any child aged under eighteen who does not have a CTF."
Claire Evans, Marketing Director, Legal & General Investments said:
"The cost of funding our children and the ambitions we have for them are continually rising. All parents want to give their children the best possible start and offer them both choice and opportunity during their adult years.
"The new Junior ISA will allow children to benefit from tax free investments for the duration of their childhood. Parents, grandparents and wider family members will be able to make regular or lump sum contributions until the child turns 18."
Get 43% more from your Junior ISA by investing in stocks and shares
Commenting, Richard Saunders, Chief Executive of the IMA, said:
"Equity markets have been choppy in the last few years, but a longer term perspective shows that over time equities have outperformed cash.
"Based on average returns over the last 110 years, eighteen years of steady investment in an equity fund would have resulted in 43% more than investing in cash.
"Junior stocks and shares ISAs incentivise parents to provide strong financial support to their children. With a potential savings pot of £20,000, parents can contribute to a child's university education, fund a gap year, place a deposit on a house or save for a rainy day."
Kevin Mountford, head of banking at MoneySupermarket said:
"The Junior ISA will be a vital tool for tax efficient savers and is great news for parents and grandparents of the six million children eligible for a Junior ISA this year, and for the further 800,000 children eligible next year.
"However, autumn is an unusual time of year to launch Junior ISAs as providers traditionally focus on peak ISA season each spring to launch new products, so it may be some time until we see any real competition in this market.
"There has never been a more important time for parents to start planning for their child's future. With the increased cost of living and rise in university tuition fees, the earlier parents put their savings plan into action, the better start th
