Child Trust Funds

Investment Questions and Chats General Investment
#1

Asalamu Aleikum,

My question is about Child Trust Funds and their permissibility according to Islam. I recently came across some papers regarding child trust funds for my two children that were set up for them when they were born. They are now 15 and 13 years old. The statements I found show a lump sum amount of money on both of my children’s accounts.

A little background about Child Trust Funds - this was a UK government scheme that was designed to provide a tax-efficient way to give your child a financial boost when they turn 18. Child Trust Funds were available to children born between 1 September 2002 and 2 January 2011 but have now been replaced by Junior ISAs.

I would appreciate your advice on its permissibility.

NB: One of the Child Trust Fund accounts was opened with Halifax which invests in the UK FTSE 100 Index Tracking Fund. The other was opened with “The Share Centre” which invests in shares in companies (not sure which companies though).

Jazak’Allah

#2

Assalaamu alaykum dear brother,

Like any other investment, a CTF or Junior ISA needs to be Shariah compliant. There are Shariah compliant and non Shariah compliant products out there.

Those ISAs and CTFs which are cash based in the conventional market are 99% accruing interest.

The shares junior ISA and CTFs need to be screening for Shariah compliance.

Therefore, I would recommend you to look for a Shariah compliant Junior ISA.

Allah knows best

Sharia Compliant Junior ISA
#4

Jazk’Allah for your quick response.

We totally forgot about those accounts as we moved houses a long time ago and was not getting any correspondence. We would’ve moved them to a Shariah compliant accounts if we knew.

What would you recommend we do with the gains from the original investment?

#5

If you are sure that the investment was not Shariah compliant, then you can keep the capital but donate the profits and gain in charity.