Child Trust Fund could be helping hand children expect

As the Child Trust Fund (CTF) celebrates its second birthday on April 6, new research from The Children’s Mutual shows just how important it will be for children to have a financial lump sum at age 18.

The research among parents and children throughout the UK, shows that 73 per cent of 11 and 15-year-olds expect their parents to help pay for them to go to university and 60 per cent expect their parents to help them buy their first home.

Their parents support this view, according to the research from the UK’s only specialist in long-term savings for children. Its research shows that 91 per cent of parents expect to help fund their child going to university, 88 per cent want to fork out for their child learning to drive; 83 per cent hope to put money aside for a wedding and half of all parents (48 per cent) will be aiming to assist their child onto the property ladder.

David White, Chief Executive of The Children’s Mutual, said that parents of younger children should take full advantage of the CTF if they want to pay towards their child’s future.

Mr White said: “Our research shows that children have high ambitions and many are hoping their parents will pay. Raising children can be expensive and parents need to be prepared. The CTF provides a fantastic opportunity to encourage parents to save small amounts regularly, over the long term, helping to meet their children’s expectations. By saving over 18 years, it could prove easier for parents to help fund their children’s futures, rather than by having to find money out of savings, earned income or their mortgage when their child is older.

“We would also urge parents to speak to their wider family to help them save. Our research shows that 85 per cent of grandparents would like to save for their grandchild’s future but don’t feel comfortable offering to do so unless asked. Anyone can save into the CTF, and if families really do want to contribute towards funding higher education, driving lessons and a first home, taking advantage of its tax efficiency makes sense.”

According to calculations from The Children’s Mutual, if parents top up the CTF by an average £24 a month, in 18 years’ time their child could benefit from a lump sum of £9,750. If both sets of grandparents matched the £24 per month top up, the lump sum could increase to £27,070.

Mr White said: “It is now two years since the CTF was launched and by September this year, every eligible child aged below five will have received a CTF voucher. The CTF is now well and truly embedded into UK society and parents from all walks of life are engaging and topping up for their child’s future.”

CTF Facts – Two Years On

74% of CTFs are invested in stakeholder accounts, 20% in cash non-stakeholder accounts, and 6% are invested in CTF accounts that hold only non-cash assets or hold a mix of cash and non-cash assets.

2.75 million children have been issued with a CTF voucher

20% of children in the UK have a CTF

According to PIMA, just under 23% of parents are topping up their children’s CTF accounts with an average monthly amount of £20.

43% of parents are topping up their children’s CTF accounts held with The Children's

Mutual with an average amount of £24 each month.

The Cost of the Future

According to The Children’s Mutual, in 18 years’ time:

Three years at university could cost £60,500.
A 10% deposit on a first home could cost £27,500.
Starting a business could cost £20,200.
A wedding could cost £24,700.