The Children’s Mutual explained

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The Children’s Mutual was designed to help children get a financial head-start by being able to save a substantial amount of money, which they could access when they turned 18. This option was for most parents because HMRC provided vouchers to open the account. 

On this page, you’ll learn what The Children’s Mutual is and why it has since changed. We also explore some of the alternatives to The Children’s Mutual, such as junior ISAs and fixed rate bonds.

The rundown
  • Children’s savings: The Children’s Mutual was designed for children, with their savings made available once they reached the age of 18
  • High demand: Almost a million Children’s Mutual accounts were opened, eventually making it difficult for the company to cope with the cost of running this type of savings account
  • Children’s Mutual child trust fund: The Children’s Mutual became child trust funds in January 2005, and it’s been considered a valuable children’s saving account ever since

What was The Children’s Mutual?

The Children’s Mutual was a UK-based financial insurance and savings provider designed for children. It allowed children to save and helped prepare them financially for their future. For many parents, The Children’s Mutual offered a way to save for future tuition fees. 

The Children’s Mutual was a trading name used by Tunbridge Wells Equitable Friendly Society Limited (TWEFS). The TWEFS was a mutual organisation that provided a scheme for working people to help protect them against loss of income during an illness and build a lump sum for retirement.

When was The Children’s Mutual set up?

The company behind The Children’s Mutual was first established in 1881 as a scheme to protect working people against loss of income due to illness and to help them save for old age when they could no longer work.

Thirty years later, this company helped the Government put the National Insurance Bill in place, which created the UK’s first system of health insurance for industrial workers.

Almost 100 years later, in 2003, the company relaunched as The Children’s Mutual (more on that below).

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Why did The Children’s Mutual change?

The Children’s Mutual had nearly a million savings accounts, which created problems with the cost of running the savings and investment accounts. Basically, the accounts became too expensive to operate efficiently and cost-effectively. In turn, this led to TWEFS transferring the accounts to Forester Life Ltd in 2013. 

If the money had remained with TWEFS, it might have continued to grow, but it would have been at a much slower rate.

How did The Children’s Mutual become child trust funds?

The Children’s Mutual went through various changes, relaunching as TWEFS child trust funds in 2003 before a further change in January 2005 to the Government launched Child Trust Funds (CTFs), which have also ceased to operate. 

The Children’s Mutual operations and achievements

The Children’s Mutual provided a range of products, such as share-based stakeholder and non-stakeholder child trust funds. They also offered a Sharia-compliant stakeholder child trust fund, which recognised the faith of Muslim families. 

In 2008, the company received an award for the Best Child Trust Fund Provider from Investment Life & Pensions Moneyfacts Awards.

Alternatives to the Children’s Mutual

One alternative to a Children’s Mutual account is to open a junior ISA. You can currently pay up to £9,000 a year into a junior ISA (2023/24) , and any funds are locked in until the child turns 18. As with other types of ISAs, any interest earned in a junior ISA is tax-free, although the introduction of the personal savings allowance means most people won’t pay tax on their savings anyway. 

Another option is to open a fixed rate bond in your name. You’ll receive a competitive rate of interest for your deposit, as well as the option to renew if an offer is available, and once your deposit matures, you can withdraw it and transfer it to whomever you wish.

You can apply for various different types of savings accounts from a range of partner banks for free at Raisin UK. Visit our marketplace to see what’s available and discover alternative ways to grow your savings.

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