Additional savings boost for seven year olds

Whilst some parents of six year olds will be eagerly awaiting the 7th birthday £250 boost to their offspring's Child Trust Fund, research from Engage Mutual reveals that more than half of low income GB adults are unaware of the Government's free cash handouts.

The UK still has one of the highest levels of income inequality in the developed world and against this backdrop, Engage Mutual's 3GB research campaign tested a GB representative sample of over 2,000 people on their knowledge of the free CTF vouchers. The findings showed that 55% of those on lower incomes were unaware of this potentially significant contribution to a child's financial future.

Where parents fail to use their child's voucher to open a CTF account within 12 months of issue, the government opens one in the child's name. More than 25% of CTF accounts are opened in this way. The implication of this lack of take up is that the full potential to grow the savings pot with regular, or one off contributions (of up to £1200 per year) up to age 18 will not be realised.

"This lack of awareness is a lost opportunity for low income children," explains Engage 3GB spokesman, Karl Elliott. "Without regular ‘top ups' from parents, grandparents and other givers, the final savings pot will be a fraction of what might have been achieved."

Making it easier for lower income families to save regularly with a CTF, Engage is one of just four CTF providers in the UK with a minimum ‘top up' contribution of less than £10. The Engage CTF calculator (see childtrustfund.com/Child-Trust-Fund-Calculator.aspx) indicates how even small, regular contributions can boost savings' growth quite considerably.

Women are more financially savvy than their male counterparts as more than seven in ten were aware of the government cash hand out (73%) in contrast to six in ten men (66%).

Whilst Lancashire might not be Britain's financial hub, people from there were the most aware of the boost to family finance - almost eight in ten people questioned knew about the CTF hand out (78%). In contrast, only six in ten (65%) people from the financial heart of Britain - London - were aware of the free hand-out.

Karl Elliott, Engage 3GB spokesperson said: "With income inequality still a major issue and tough times for the foreseeable future, it is important that we raise awareness of the tax-free cash handouts so that the next generation does not miss out."