Children still losing out on a potential £7.5 million

The Child Trust Fund recently celebrated its second birthday yet the latest Government figures showed that nearly a quarter of all Child Trust Fund (CTF) vouchers issued were not invested by parents within the 12 month time frame.

Nationwide Building Society is calling on the Government to do more to encourage parents to invest their child's voucher sooner, so children do not miss out on significant interest or investment growth.

As at December 2005 about 2.2 million vouchers were issued, yet only 1.66 million of these were invested meaning 25% of vouchers had expired and those children have missed out on 12 months of interest or investment growth. Collectively these children have missed out on £7.5 million pounds or approx £14 per child over 12 months with these figures rising to £19 million or £35.30 per child over the 18 year term as their investment has been reduced to only 17 years.

By December 2006, almost 2.95 million vouchers had been issued by the Government, but only around 2.1 million of these have so far been invested by parents meaning that the vouchers of around 850,000 children are either expired or have yet to be invested.

In December 2006 Nationwide published the findings of research on the attitudes of MPs to CTF. 92% of Labour MPs felt that the Government should take measures to increase early take-up of CTF vouchers to ensure that children did not miss out on interest on, or growth of, the Child Trust Fund. Waiting 12 months before automatically investing the money for parents who take no action means these parents' children are losing out on a whole year's interest or growth in their fund.

Matthew Carter, Nationwide's divisional director mortgages and savings, said: "The Government needs to do more to encourage parents to invest their child's voucher as soon as possible and certainly before the 12 month expiry period otherwise, through no fault of their own, it is the children who are losing out on interest or investment growth.

"Parents need to recognise the urgency in presenting their child's voucher for investment to ensure their children receive the full 18 years worth of interest or investment growth that they are entitled to and not a year less. The Government has said that its aim is to entrench a culture of saving for people of all ages. However, they still need to get a quarter of parents on side and in doing so could make a real difference to so many young people, giving them a nest egg to start their adult lives."