Child Trust Fund changing nation’s savings habits

The Children’s Mutual today welcomed the latest Child Trust Fund figures, released by HM Revenue & Customs (HMRC), which show that 2.5 million accounts have now been opened, with three quarters of all parents opening the accounts themselves.

David White, chief executive of The Children’s Mutual, said the latest figures are a resounding success for the scheme and indicate an exciting sea change in the nation’s attitude to saving.

David White said: “For three quarters of parents to make an active decision about their child’s financial future is a fantastic achievement. It may seem a small step for parents to take, but for the nation as a whole it’s a giant leap, showing people are recognising the value of long-term savings. It’s not only great news for children but could have a positive knock-on effect for all generations, including those thinking about long-term saving for retirement.

“Particularly encouraging is the fact that the CTF has helped to double the number of parents saving long-term for their children, and many parents – and the wider family – are also contributing lump sums by cheque. The average monthly payment has increased by 50% from £15 pre-CTF to £23, which means that, allowing for an initial government voucher of £250 and another at age 7, a child could receive a lump sum of around £9,390 when they reach 18. This could make a significant contribution towards the cost of higher education or nearly 34% of the deposit for a first home.”

Mr White also welcomed the announcement of the Government’s first Child Trust Fund Week, which will take place from 15 January to 20 January:

“January is the month we start making our financial resolutions for the rest of the year, so the arrival of the first ever Child Trust Fund Week is very timely. It’s the perfect opportunity for parents to think about investing their child’s voucher and resolve to speak to the wider family and friends about topping up their account. Saving just £10 a month could mean a savings pot of £4,700 when the child reaches 18, so getting the whole family involved in saving for children is key.”