Child Trust Fund contributions continue to increase

Regular monthly contributions into Child Trust Funds continue to increase and now amount to £12.6 million per month, according to the latest quarterly survey conducted by TISA - the Tax Incentivised Savings Association.

Covering the fourth quarter of 2008 for the period up to 15 December, the survey provides an insight into more than 2.6 million CTF accounts representing 65% of the market.

Monthly direct debit CTF contributions rose to an average of £22.10 from £21.99 in the previous quarter, the 10th successive increase since the survey began in August 2006. The number of accounts with an active monthly direct debit subscription grew by 22,549.

There was also an upsurge in the number of accounts receiving lump sum contributions which rose to 195,356, up from the previous quarter's figure of 166,021. The average lump sum subscription however reduced to £471 from £508.

Tony Vine-Lott, TISA Director General said: "CTFs continue to buck the savings trend as parents invest in their children's future and I am particularly encouraged by the increase in the amount of regular savings. Even at the current average direct debit subscription level the CTF should amass in excess of £5,000 after 18 years. This will be a tremendous boost to a young person beginning their adult life.

"But there is still plenty of scope to increase contributions up to the maximum and it is worth remembering that it is not just parents who can contribute to a CTF. Family and friends can also make regular contributions or a lump sum payment and many will have done so at Christmas, these will be reflected in our next quarterly survey."

The level of engagement between parents and the CTF is also on the rise with HMRC statistics indicating that 72.7% of vouchers issued were used to open an account (the fourth successive quarterly rise).