David White, Chief Executive, The Children’s Mutual responds to annual HMRC statistical report on Child Trust Funds
75 per cent of parents are actively investing their Child Trust Fund voucher despite tougher economic conditions starting to hit
The Children’s Mutual today welcomed the Government’s annual update on the progress of the Child Trust Fund (CTF) and in particular confirmation that 75 per cent of children’s accounts are being initiated by parents. Evidence from The Children’s Mutual shows that parents who actively open a Child Trust Fund are more engaged with the process of saving for their children and are more inclined to regularly top-up their child’s account.
David White, Chief Executive of The Children’s Mutual said: “Despite difficult economic conditions starting to hit, we are delighted that the levels of accounts being actively opened has remained consistently high and the HMRC figures for the first part of 2008 show a marked increase in the number of vouchers being used to open accounts.”
“Even in these times of economic difficulty, it is encouraging to see that parents remain committed to saving for their children and view the Child Trust Fund as a crucial part of providing a more stable financial future for them. Conversations we have had with our customers show that saving for their children is often the last thing they want to cut back on when money is tight.”
“The financial pressure on families has altered considerably from 2007 and across 2008. Hopefully today’s Bank of England base rate cut and the Prime Minister’s request that this be passed on to the benefit of customers through reduced mortgage payments, together with the recent reduction in fuel prices, may have brought some relief allowing family finances to stabilise.”
“Our own Brand Tracker research supports the HMRC evidence that parents remain as committed as ever to saving – with over 70% of expectant couples and parents of the opinion that now is a good time to save for children. Our own levels of opening rates, direct debits and ad hoc payments remain strong with half of all our accounts receiving additional regular or lump sum contributions made by family and friends; this is nearly three times the pre-CTF family saving average.”
“We are further encouraged by the positive steps being taken by the government in the wake of its consultation with CTF providers about how to make account opening even easier. We firmly believe that the shift towards a process where providers can open an account without collecting the physical voucher – being introduced by the government in April 2009 – will significantly ease the system and encourage an even higher level of engagement.”
“The importance of getting families engaged with the process of saving – including actively opening a CTF account and adding contributions – couldn’t be more crucial for the children. The average monthly top-up to a Children’s Mutual CTF is £24 which could mean a fund worth £9,750 at age 18 if payments remained consistent.” http://www.hmrc.gov.uk/ctf/statistical-report-2007.pdf
 TCM Brand Tracker Fieldwork dated Aug and Sept 08
 Average Direct Debit into The Children’s Mutual CTF accounts is £24.
 Projection based on money being invested for 18 years in a stakeholder CTF account, alongside the Government’s initial £250 voucher and another £250 at age 7, with yearly growth at the FSA tax-exempt mid-rate of 7% and charges of 1.5% of the account’s value each year. These figures are not guaranteed, shares can go down as well as up and the eventual lump sum could be more or less than indicated.