If the main reason you are on the hunt for the best children’s savings plan is to save for your child’s future university education, you’re not alone.
Millions of parents have started thinking about, researching and contributing to children’s savings plans since maximum tuition fees rose to £9,000. While universities don’t have to charge the maximum, it’s likely that on average, a degree course will cost £8,500 a year – not including accommodation and living costs.
Because of this, a new University Savings Plan has been launched to meet the needs of parents everywhere who want to give their child all the benefits that higher education can offer.
What makes this plan special?
The Shepherd’s Friendly University Savings Plan is a completely tax-exempt plan that allows parents to save up to £2,400 a year in increments of £100, £125, £150, £175, or £200 a month.
The growth of the savings and the eventual lump-sum payment will be completely tax-efficient.
The premiums in this plan are flexible, which means that you can save more or less each month depending on your individual circumstances.
Invaluable benefits and protection
Moreover, if the policyholder dies, Shepherd’s Friendly continues making the premium payments into the University Savings Plan as long as the policyholder is the parent or guardian and under 50 at the time the plan is purchased.
This makes the University Savings Plan part children’s savings plan and part customer protection plan, ensuring that your child is not denied an education should the unthinkable occur.
Another aspect of the University Savings Plan that gives families insurance against misfortune is the added protection of sickness benefits. If the child is unable to attend school for more than 4 weeks, whether due to illness or injury, the family will receive sickness benefits to offset the cost of having a parent absent from work.
The University Savings Plan also stands out because, unlike other comparable savings plans, parents/policyholders retain some control over when and how much money is released, even after the child turns 18.
You can choose to have your child receive their lump sum at the age of 18 as a coming-of-age gift, at the age of 21 as a graduation gift, or allow for withdrawal in stages while they are between the ages of 18 and 21.
Allowing parents to make tax-free withdrawals gradually gives parents some assurance that their child is using the savings to cover the cost of their education rather than splashing out with their windfall.
What risks will I be taking?
While the University Savings Plan is specifically designed to help you save for your child’s future, debt-free degree, it’s important to keep some risks in mind.
The monthly contributions will be invested in Shepherd’s Friendly’s Profit Sharing Fund, which invests in a mix of property, gilts, bonds, stocks and shares, and cash. This means the investment performance could vary, and your child could receive a higher or lower sum than you expect.
As with all investment-based savings accounts, you could get back less than you put in.
It’s also important to note that the full benefits of a University Savings Plan are only achieved when you save gradually and regularly over your son or daughter’s entire childhood. Stopping contributions before the plan is mature or taking money out of your child’s University Savings Plan will mean paying a surrender penalty.
Click here to apply for the Shepherds Friendly University Savings Plan