Aviva Solutions – Saving for Children

Many of your clients want to share their wealth to provide financial stability for future generations.

Published: 20 Jun 2025

Aviva recently launched the Children’s Investment Trust, expanding their range of products aimed at helping parents, and other relatives, maximise savings potential while taking advantage of tax exemptions. 

Richard Hales Proposition Manager Aviva Life & Pensions Ireland
Below, I will explore:
  • The benefits of using Bare Trust solutions for regular and single premium investments to leverage the small gift tax exemption and lifetime Capital Acquisition Tax (CAT) thresholds
  • Compare the low interest on bank deposits with the potential growth available in unit-linked policies.

1. Utilising the Small Gift Tax Exemption for Regular Premium Policies

Aviva’s Children’s Savings Investment Trust allows individuals to contribute up to €3,000 annually per child (€6,000 per couple to the same child) to maximise the Small Gift Exemption limit. This regular premium policy is a tax-efficient way to save for a child’s future, providing flexibility in investment choices and the potential for long-term growth.

Advantages

  • Tax Efficiency: Contributions up to the exemption limit are free from gift tax, making it a cost-effective way to save.
  • Flexibility: Trustees can adjust their investment choices throughout the policy term, to accommodate changing financial goals and market conditions.
  • Long-term Growth: Investing in a diversified portfolio has the potential to earn higher returns than traditional savings accounts over the medium to long-term.

2. Utilising CAT Thresholds for Single Premium Investments

Aviva’s Investment Bond, used with a Bare Trust, is an excellent option for those preferring lump sum investments. By utilising CAT thresholds, parents and grandparents may make significant contributions without incurring gift tax liabilities for beneficiaries1.

Advantages:

  • Tax Planning: Strategic use of CAT thresholds can minimise tax impact, allowing funds to be invested for growth.
  • Potential for Higher Returns: Lump sum investments in unit-linked policies can benefit from market growth, offering potentially higher returns than deposit accounts.

3. Bare Trust Solutions for Regular and Single Premium Savings

Bare Trusts are a popular choice for managing savings for children. These trusts ensure that the assets are held and managed by trustees for the benefit of the child, who gains absolute entitlement to the assets upon reaching adulthood.

Advantages:

  • Beneficial ownership—the funds are beneficially owned by the beneficiary on the date the premium is paid, allowing for efficient use of the small gift allowance for regular premium policies and providing beneficial ownership of the funds for the beneficiary for single premium investments.
  • Unlimited fund switches – trustees enjoy flexibility with unlimited and free fund switches.
  • Trustee oversight – bare trusts provide strong oversight of funds and policy management, ensuring protection of the beneficiary’s interests.
  • Beneficiary awareness flexibility— Trustees have flexibility in notifying beneficiaries about their funds. They can choose the right time to inform them, whether at age 18, 21, 25, or later.
  • There is no relationship requirement for Donors – anyone can set up a bare trust, and donors do not need to be related to the beneficiaries, providing a large network of potential contributors.

Understanding the role of deposits and investments in the financial plan

Deposits and investments play complementary roles in helping your clients achieve their financial objectives. Deposits are ideal for short-term needs, such as building an emergency fund or managing immediate financial obligations like high-interest debt. In Ireland, households hold over €163 billion in deposits, with 90% of that amount earning interest rates below 1%2. While deposits offer security, they often fall short of providing long-term growth. Conversely, investments are designed for medium- to long-term goals, aiming to protect against inflation and achieve capital growth over the medium to long-term. Although deposits are crucial for short-term financial planning, they should not be relied upon for long-term objectives, such as investing for a child’s education. A diversified investment strategy is essential for maximising potential returns over time.

Gross performance of popular funds to 01 May 20253 3 Years Ann 5 Years Ann 10 Years Ann
High Yield Equity 12.3% 16.5% 10.4%
Cantor Multi-Asset 70 9.6% 10.8% 6.6%

Aviva’s savings and investment products offer a range of options for parents, grandparents. and guardians looking to secure a child’s financial future. By understanding the advantages of Bare Trust solutions, utilising tax exemptions, and comparing the growth potential of unit-linked policies with traditional deposit accounts, financial Brokers can provide tailored advice to meet their clients’ needs.

To learn more about saving and investing with Aviva, contact your Account Manager.

1. CAT is a tax on gifts and inheritances. Your client’s beneficiary can receive gifts and inheritances up to a set value over their lifetime before paying CAT. Gifts and inheritances received below these thresholds over the beneficiary’s lifetime are not subject to CAT.

  Group A Group B Group C
Current CAT Thresholds
(on or after 02 Oct 2024)		 €400,000 €40,000 €20,000

Generally, Group A includes children of the disponer. Group B includes other relatives of the disponer, such as grandparents. Group C includes everyone else. For more details see CAT groups and group thresholds (revenue.ie).

2. Source: Central Bank of Ireland. Based on data to February 2025

3. Source: Longboat Analytics to 01 May 2025. Performance quotes gross of fees.

Warnings

The information provided is accurate as of  May 2025. You should not base your decision to invest in this product solely on the information in this article. Your clients should seek professional tax and legal advice to satisfy themselves of their tax position and the legal responsibilities of trustees. The information given is a guideline only. Aviva Life & Pensions Ireland DAC accepts no responsibility for monitoring CAT thresholds or for any CAT liabilities that may arise.
Remember that tax laws can change over time, so it is important to check revenue.ie for the latest information.  .

Warning: Past performance is not a reliable guide to future performance.

Warning: These figures are estimates only. They are not a reliable guide to the future performance of  your investment.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in these products you may lose some or all of the money you invest.

Warning: The income you get from this investment may go down as well as up.

Warning: These products may be affected by changes in currency exchange rates.

Aviva Life & Pensions Ireland Designated Activity Company, is a private company limited by shares, registered in Ireland No. 165970. Registered office at Building 12, Cherrywood Business Park, Loughlinstown, Co. Dublin, D18 W2P5. Tel (01) 898 7950, www.aviva.ie

Aviva Life & Pensions Ireland Designated Activity Company, trading as Aviva Life & Pensions Ireland and Friends First, is regulated by the Central Bank of Ireland.