New levels of child benefit

With new levels of Child Benefit coming into effect from January 5, leading Child Trust Fund (CTF) provider, The Children's Mutual has welcomed the move calculating that 2009 newborns could benefit from a collective lump sum of at least £15.4 billion if families were able to save their Child Benefit into their CTF account over 18 years.

From Monday 5 January 2009, parents and guardians will receive £20 a week for first born or only children and £13.20 for each additional child - up from £18.80 and £12.55 respectively in 2008. According to The Children's Mutual calculations, an extra £1.20 and £0.65 for first and subsequent children respectively can make a significant difference when invested over the longer term. £20 a week invested monthly into a first child's CTF could result in £32,300 when the child turns 18 - an increase of more than £1,800 over the projected maturity value of an account saving the previous £18.80 a week.

And according to its calculations, if parents can manage to save even a quarter of the Child Benefit they receive into a stakeholder CTF, it could be worth £8,900 in 18 years' time - a significant sum for a teenager to start their adult life.

David White, Chief Executive of The Children Mutual said: "According to our research, nearly a third (29 per cent) of parents currently say they are saving their offspring's Child Benefit while 22 per cent say they use it to buy their children treats and that, despite the economic climate, now is a good time to save for their children. For those who can afford to do so, we urge them to save at least part of their Child Benefit for the long-term future so they and their offspring don't miss out.

"The costs of attending further or higher education, leaving home or simply learning to drive and buying a first car are significant for young people and their parents. Using some Child Benefit to top up a child, or children's, CTF account is a perfect example of how a ‘little and often' view of child savings can bring real benefits over the long term and help families to ensure that all their children enter adulthood with a tangible financial asset."