Child Trust Funds turning the tide of UK savings habits
Leading Child Trust Fund provider, The Children’s Mutual comments on today’s figures from HM Revenue & Customs (HMRC), which show that 4.6 million children now have a Child Trust Fund (CTF).
David White, Chief Executive of The Children’s Mutual, said: “We are seeing record numbers of CTF accounts being opened each month, with over 48,000 accounts opened with The Children’s Mutual in the last quarter. This is a fantastic reflection of the increasing awareness of the importance of saving. Over two million parents are using the CTF to make monthly contributions and amongst our customers those contributions have risen by 60% from £15 to £24, demonstrating how the CTF is really helping to get families to save.
“Industry figures suggest that across the market significantly more families are now saving regularly for their children’s futures. Our own customer experience has seen saving rates rise from a pre CTF level of 18% to in excess of 50% – a trebling in the rate of saving. Even more encouraging is that families from all walks of life are embracing the CTF, fulfilling the purpose for which it was created. Lower income families are amongst the most engaged, with 30% topping up monthly, despite the current market conditions. The CTF has captured the imagination of the wider family too. It’s not only parents who are investing in their children’s futures, but grandparents, aunts and uncles are contributing, making the CTF a core part of families’ financial planning.
“It is our estimation that collectively almost 5 million young children have now had around £2 billion saved for them into their Child Trust Funds by the 11 million adults directly involved with the CTF and the Government.
“2009 has been a particularly prominent year for the CTF, as the eldest children to have an account are now starting to receive the second payment by the Government when they reached their seventh birthday. The CTF has made huge strides in four short years; engagement has increased year on year and it is having a positive effect on the national saving habits, helping to ensure that all young people start their adult life with a significant financial asset.”
Further CTF statistics:
- 50% of the Government investment goes to those with household incomes at the low end of the scale – below approximately £16,000
- 70% goes to children from families on average income or below
- 97% of the total goes to households with income below £50,000
 Average of £15/m saved into TCM Baby Bonds prior to the advent of the CTF against a current monthly TCM CTF DD level of £24.
 Based on data from our over 700,000 CTF customers.
 Government investment into CTF @ £250m/yr x 5 years = £1.25bn TCM fund holdings show an investment split of approx 50% gov:50% parental. Therefore total potential investment would be £2.5bn if all providers experienced a similar balance. This figure has been adjusted down to £2bn to allow for market fluctuation.
 Unique parents and grandparents of 4.6m CTF account holding children.
 Figures extrapolated from HMRC Child & Working Tax Credit stats 2009.