CTF contribution levels increase
Lump sum contributions to Child Trust Funds have risen for the fourth consecutive quarter, according to the latest statistics compiled by TISA from providers representing 72% of all CTF accounts.
More than 4 million CTF accounts are included in the survey which covered the quarter to 15 December 2010. During this period the average lump sum subscription grew to £525, up from £516, £511 and £507 in the previous three quarters of 2010. This increased the total amount subscribed in lump sum contributions to over £190 million.
CTFs remain open to existing account holders and will continue to benefit from tax-free investment growth until the child's 18th birthday. Contributions from the child's family and friends up to an overall total of £1200 each year can be made into the fund. TISA is encouraging all parents who receive a CTF voucher to take advantage of the scheme by choosing an account for their child.
Changes announced by the government last year mean that children born from January 2011 will not qualify for a CTF. Discussions with product providers are currently being held by HMT and HMRC to determine the make-up of the proposed new Children's Savings Account or ‘Junior ISA'.
Tony Vine-Lott, Director General of TISA says: "Our survey shows that there is still a strong desire by parents to ensure that their children have a financial asset at 18. This bodes well for the new children's savings initiative and we are actively involved in the discussions to design and implement the scheme.
"CTFs had an objective of creating assets for young adults regardless of their background and I hope that the successor will be equally as successful. We should also not lose sight of the fact that schemes such as these have the potential to improve the financial literacy of youngsters - this is essential if we are to encourage a culture for saving."