Save, Save, Save
Eligible families urged to make the most of Child Trust
Funds
Parents of 18 to 30-year-olds are warning families of younger
children to start saving now to fund the future, with nearly a third
(28 per cent) saying that they have either remortgaged or are
planning to remortgage to fund their child’s adulthood. As the
Coalition Government threatens to cut the Child Trust Fund
(CTF), The Children’s Mutual is urging parents whose children
are eligible for the accounts to make the most of them while they
can, citing parents of adult children who say if they had their
time over they would have saved.
David White, Chief Executive of The Children’s
Mutual, said: “Saving for your child is a necessity not a
nice-to-have. Parents of today’s 18 to 30-year-olds are
having to find an average of £30,000 to fund their adult
children the hard way – by remortgaging or borrowing further.
We believe the only way that most families will be able to help
fund children to fulfil their potential going forward is by saving
regularly over the long term. We are appalled that the new
government is seeking to cut the CTF – the most successful savings
scheme in the UK – and believe this short-term view will cost our
children dearly in the future.
“We remain committed to achieving the best
possible outcome for families and for those who are fortunate
enough to already have or still be eligible for a CTF, we believe
it is an excellent vehicle for saving for children’s futures.
We intend to put the full weight and experience of our 129 years in
the field of family savings behind the CTF until the very last fund
matures and we urge the parents of CTF holding children to not be
disheartened or confused by the Coalition’s proposal. The
Government has confirmed that for existing customers, the accounts
will remain as they are; meaning that the families of the five
million CTF holding children across the UK can continue to save up
to £1,200 a year tax efficiently to help give their child a much
needed springboard into adulthood.
“We believe that children stand the best
chance of fulfilling their potential if money isn’t an
insurmountable barrier to their choices and decisions. The
CTF has been a phenomenal success with families investing more than
£5 million every week for their children and we urge parents to
make the most of it.”
The Children’s Mutual is experiencing a
significant uplift in calls to its customer services team from
parents concerned and confused by this week’s announcement and is
seeking to reassure parents. The most frequent questions
being asked are:
Q: I’m an existing
customer and currently save regularly via direct debit – has all my
hard work been in vain? What happens to the account now?
A: Your hard
work certainly has not been in vain. The Government has
confirmed that existing CTF accounts will continue to run as
previously so you will be able to continue your fantastic work in
saving for your child’s future.
Note: The average direct debit payment
made by parents into CTFs held with The Children’s Mutual is £24 -
if this amount were paid monthly throughout the life of the
account, it could result in a lump sum of £9,750 upon maturity
after 18 years.
Q: I have a child
under the age of one but haven’t yet placed my voucher, is it now
worth doing this?
A: Yes absolutely.
The Government has confirmed that children who are issued with a
voucher before 1st January 2011 will be able to place it
with a licensed provider and take full advantage of tax-efficient
saving of up to £1,200 a year. This is the most generous tax
efficient allowance available for saving for children and we urge
families who can afford to save to take full advantage of this.
Q: My child is due to
turn seven in the near future, will they still receive the
additional payment promised by the Labour Government?
A: The Coalition has
confirmed these payments will continue until 1 August 2010, so if
your child turns seven before then they will be one of the
fortunate ones.
For further information on the changes to the
Child Trust Fund, please visit:
http://www.thechildrensmutual.co.uk/child-trust-funds/child-trust-fund-faqs.aspx
[1] 72 Point Cost of Children Research for The Children's Mutual
– Jan 2010 - Question 20
[2] 72 Point Cost of Children Research for The Children's Mutual –
Jan 2010 - Question 18
[3] 72 Point Cost of Children Research for The Children's Mutual –
Jan 2010 - Question 20
[4] 72 Point Cost of Children Research for The Children's Mutual –
Jan 2010 - Question 12
[5] Figures extrapolated from TISA – Sept 2009 CTF commentary
document http://www.tisa.uk.com/statistics.html?stat_type=ctf
£22,000,000 invested each month x 60 (months in 5 years) =
£1.3billion / 1825 days (number of days in five years = £723,000
per day x 7 days per week = £5.061m.
[6] Based on contributions of £24 per month from parents. This
future projected value is based on money being invested every month
plus the Government’s initial £250 voucher and another £250 at age
7 for 18 years in a Stakeholder Child Trust Fund Account. We’re
assuming an investment return of 7% a year, and charges of 1.5% of
the CTF account value each year. The projected values aren’t
guaranteed because the value of shares goes up and down. So the
final payout could be more or less than this. This figure
reduces to £9,306 if the government’s Age 7 payment is not
made.