Child Trust Fund has changed the face of savings
The Children’s Mutual has today welcomed the figures from HM Revenue & Customs (HMRC) which show 3.23 million children now have a Child Trust Fund (CTF) account. According to the UK’s only specialist in long-term savings for children, 2007 marked the year when the face of savings changed for a whole generation.
David White, Chief Executive of The Children’s Mutual, said: “The CTF is set to change the lives of a whole generation. Our figures show that family engagement with the CTF has increased hugely, with more and more families now saving regularly for their children. Every eligible child under five and many five year olds now have a CTF, meaning that the UK is now home to the first ever generation with a promising financial future.
“Before the CTF was introduced, just one in five families was saving regularly for their children; this has now leapt dramatically and in 2007 almost half of new CTF accounts placed with us received monthly top ups from the outset. And families of every social background are saving, meaning the CTF really will help to provide a financial springboard into adulthood for the Trust Fund Generation.”
Figures from The Children’s Mutual and its partners show:
- In 2007 almost half of new CTF accounts opened had a monthly direct debit set up at the same time (up by over 9% from 43 per cent of accounts with direct debits in 2006 to 47 per cent of accounts in 2007);
- The average monthly amount being saved by direct debit is £23.41, up by nearly 4% (from £22.54) – if this contribution remains unchanged until the child reaches 18, they could receive a lump sum of £9,500 when the CTF matures;
- The average amount being deposited by cheques has increased by 7% to £441, more than a third of the annual top up limit of £1,200;
- CTF customers are increasingly opening accounts and topping up online. In 2007, the percentage of online applicants shot up by 27 per cent and the introduction of a new online debit card top up facility in 2007 has pushed the average online top up to £302.
Mr White said: “The first CTF vouchers were issued nearly three years ago and in such a short space of time it is fantastic news that so many families are realising the importance of saving for their children. Anyone can top up a CTF account and we are urging parents to talk to grandparents, wider family and friends to help with saving for children as just an extra £10 a month in addition to other contributions over 18 years can make a big difference – potentially adding an extra £3,600 to a child’s CTF pot.
“By saving regularly over the long term, families can help their children to start out in adult life with a lump sum to help towards the cost of the future. And with careful planning and saving they could also avoid the nightmare being faced by parents of today’s 18-year-olds who often have to raid their savings and retirement funds to give their children a financial headstart.”