Money and children: how to provide children with a comfortable future

Russia is gradually developing tools for financial protection of the child, which if desired can take advantage of his parents and other relatives. Their set is about the same as in the US and Europe. However, according to the international financial consultant FCP (Financial Management Ltd) Isaac Becker while these tools are not as flexible as in developed countries. “For example, if we are talking about insurance, foreign products provide more customization options and additional features. Insurance can “construct” so that it will best meet your needs,” says the consultant.

However, in Russia the demand for such products is lower than in the West. According to the observations of Becker, Russian citizens often doubt the reliability of the financial institutions offering such products. “It slows down their spread,” he says. Also, according to experts, the development of the market of services of financial protection has stalled because of the weak coverage of issues of financial literacy in the Russian media. What instruments financial care of the children now available in Russia and what you need to know about working with them?

“Children’s” Deposit

In Russia citizens can open a Deposit for a child. There are two main options open to these contributions. The most common — in favor of a third party. “Usually it’s the standard contract on the Deposit, — the Director of Department of development of private banking business Absolut Bank Evgeny Safonov. — The contract is with one parent, and the beneficiary specifies the child”. The parent can dispose of the funds held on Deposit, including to withdraw funds until a child’s claim to contribution their rights. He can do it before the application of the third person of their rights. The child, in turn, can claim 14 years of age — this age in accordance with article 26 of the civil code, it acquires the right to make deposits and dispose of them.

The second option, which was chosen, for example, Absolut Bank and Sberbank, is the opening contribution in the name of the child. In this case, the funds may dispose of a baby. “The peculiarity of this approach is that if a parent needed the money, he will not be able to remove them without the consent of bodies of guardianship and guardianship, — says Evgeny Safonov. — This approach helps parents to achieve this goal is to accumulate a certain capital for a child.” According to the Russian legislation, the guardianship control the rights and legitimate interests of minors in disposing of their property. In this case we are talking about withdrawing funds from the Deposit.

The possibility of opening the Deposit for the minor and the terms of withdrawal of funds shall be governed by articles 26 and 37 of the Civil code of the Russian Federation. Starting from the age of 14 the child in both described embodiments, may perform certain operations on the Deposit. In particular, it can replenish the Deposit and withdraw funds from the Deposit in the amount of their income (e.g., scholarships). For this the Bank needs to provide the relevant documents. If the teenager will not be able to provide supporting documents for withdrawals from the Deposit, you will need parental consent and guardianship and guardianship. At age 18 the young person has the right to dispose of the whole amount of Deposit without restrictions.

Currently, of the largest ten banks in terms of assets, specialized deposits for children offer only four of the credit organization: Sberbank, Alfa Bank, Rosselkhozbank, and Promsvyazbank.

In Sberbank it is possible to open a contribution for the child “Pay” for a period of 3-6 months to three years in rubles, dollars and euros. The minimum amount of RUB 1 thousand, $100 or €100. Interest rates depending on Deposit amount and term, be 4.9 and 5.4% per annum for rouble contributions of 0.1–0.9% for dollar and 0.01% — for contributions in euros.

Alfa-Bank is the contribution of “Children” for a period of one to three years. Money can be placed in rubles, us dollars or euros. The minimum amount of 1.5 million rubles., $50 thousand or €50 thousand Rate is 7.2–8% for ruble deposits, 2,6–3,6% — for USD and 2,5–3,4% — for deposits in Euro (depending on amount). Russian agricultural Bank offers the Deposit “Children’s”. The minimum amount that can be put, — 3 thousand roubles, $100 or €100. To place funds for a period up to 1825 days. Rates range from 7.4 to 9% depending on the amount in rubles, from 1.65 to 3.85% in dollars and 1.7–3.35% per Euro.

The PSB, in turn, offers a contribution to “My piggy Bank”, which can be opened in favor of third parties, including children. It allows you to place funds for up to 367 days. The minimum sum — 10 thousand rubles., $300 or €300. Rates — 7,21–of 7.87% in rubles 0,5–1,21% — to $ 0.15 per cent — in euros.

According to the Director of the direction “Junior” and joined the Julia Popovich, opening of deposits to minor clients are isolated cases. Such deposits are opened on the initiative of parents (and grandparents). “As a rule, it’s a long deposits with a maturity of not less than a year — says Popovich. Usually their goal is the accumulation of the majority of the child, say, education.”

At the same time the CEO of the company “Personal Advisor” Natalia Smirnova believes that due to low interest rates any contributions today are looking for saving money on short-term goals for a period of a year or two. “The contribution is a tool which is not able to beat real inflation, — says she. — It turns out that the child was 18 years of age gains access to capital, which will not grow, but rather shrink”. According to Smirnova, it is much easier to open a contribution for themselves and to have access to this money at any time. “You can always explain to the child that it is his contribution and work with him to replenish it, she says. In this situation, the child simultaneously learns financial literacy, involved and understands that it is his personal “piggy Bank.”

Plastic for child

Among the capabilities of banks is possible also to note the service release for child plastic card. It will be attached either to the main account of the parent or child opens a separate account, but the name of the parent, which he can control via your Internet Bank. “This is done in order to protect the child (paper money can take away), and to control costs, says Eugene Safonov. — You can always see what the child has spent money”. In addition, according to the banker, it is a flexible limit management. For example, you can limit the amount the child can spend throughout the day. In addition, the parent may, if desired, to limit the ability of the child to pay by card online. According to the statistics of the Bank among their customers not more than 5% set for their children limits, and the average account balance of the child in the Bank — 2300 RUB.

Each Bank usually sets the legal age of issuing cards to children. For example, in the children’s Bank card may be issued already six year old child, in the savings Bank to seven years, and PSB — child from 12 years old. By the way, unlike the contribution of this service more popular. Julia Popovich of the Bank said that such card products are open individually, or centrally within the schools. In this case, if the parent is not a Bank customer first opens an account in his own name and released a free map and then the name of the child.

Interviewed financial advisors believe that using a child of their own Bank card, there is nothing bad or dangerous. “If the child really has to go to the store and it has costs, of course, I’m extra card”, — says Natalya Smirnova.

Insurance products

Almost all of the products on the market of personal insurance can be purchased for both adults and children. Young children due to the fact that they are often ill, it makes sense to issue the policy of VHI, as it’s cheaper than the service in private clinics, say finconsultant surveyed by RBC.

According to the representative of the press service of the insurance company SOGAZ, all in great demand lately are children’s cumulative life insurance programs. They provide financial protection in case of unpleasant events (including the departure of the parents from the life or loss of the ability to work), and also allow you to accumulate a certain amount, for example, to enroll the child in school. Such insurance prepares an adult, the insured specified in the policy child, and the beneficiary (who receives the insurance payment) may be both the child and the adult.

As told RBC General Director of IC “Rosgosstrakh-Life” (“RGS-Life”), Alexander Bondarenko, insurance for children is 40% of the business within the insurance program offered by his company. Children most often fear the end of school to adulthood, at the time of admission to the Institute.

Savings policy works in the two cases. It specifies a certain date, e.g. the alleged admission of the child to the Institute. After its occurrence, the child receives money — how it works cumulative part of the policy. “The insurance cover this policy is triggered when before the date the child or parent something happens, — says Bandarenka. In this case, the money is paid immediately in the treble”. The reason of early repayment may become the death of a parent, his disability, loss of capacity and critical illness (cancer, heart disease).

According to the Director of retail sales “SK “ERGO Life” Alexander Gogokhiya, and on any long-term life insurance contract the beneficiary can make a baby. However, if the insured person dies, the beneficiary under the policy, that is, the child will be at this point a minor, the insurance is paid in favor of his legal representative. “The obligation of the insurance company to pay insurance, but we can’t control the future use of these funds, and theoretically there is the possibility for abuse by unscrupulous citizens,” Gogokhiya said.

However, in case of a parent worried about this point, in the “special conditions” of contract may prescribe that the child in the event of withdrawal of a parent from the life to his age, will receive a payout, for example, in 14 years. “This is the age when a child can already access your Bank account,” concludes Gogokhia.