More kids cash goes missing

With the Government's Child Trust Fund initiative reaching its third anniversary since inception, it seems that giving money away is still no easy task.

New data posted on HM Revenue & Customs website has revealed that the number of vouchers – worth at least £250 each – that expire after twelve months without having been used to open an account has steadily trended upwards.

According to HMRC 24% of vouchers issued in the first six months of the scheme, in 2005, failed to be invested by expiry. However, this steadily ticked upwards each successive quarter to 30% for those vouchers issued at the end of 2006 and which expired in the fourth quarter of 2007. Since inception some 750,000 vouchers had expired without an account voluntarily being opened by the end of 2007.

"This suggests that vouchers which are collectively worth literally millions of pounds have either been chucked in the bin, or left languishing in drawers or stuffed behind the sofa," said Jason Hollands of F&C Investments.

However, all is not lost as parents who fail to invest the voucher will ultimately have an account automatically opened for their child by the Government. This growing pool of Revenue Allocated Accounts is spread across a subset of the total universe of CTF providers and focused entirely on 'Stakeholder' fund options.

"Ending up with an account randomly allotted by the tax man may not necessarily represent the best investment option for your child and you will have lost our on a year of potential growth," said Hollands.

"The announcement in the Budget that in future it will no longer be necessary to submit a physical voucher may help improve things. However, the pattern in the data suggests that awareness has subsided a little since the initial noise and government promotion at the inception of the CTF. Education and awareness is paramount and in this respect both Government and providers have an important role to play," concluded Hollands.