CTFs benefit from lump sum contributions

Lump sum subscriptions to Child Trust Funds (CTFs) have risen to a record average level of £525, according to the latest quarterly survey conducted by TISA (Tax Incentivised Saving Association).

Representing 64% of all CTF providers TISA’s survey covers the period up to 15 June 2009 and provides an insight into 2.85 million accounts.

Average lump sum subscriptions increased for the third quarter in succession to reach £525 (£516 and £483 in the previous two quarters). 8.7% of all CTFs have now received a lump sum contribution, up from 5.5%in August 2006 when the survey commenced. The total number of CTFs that have received a one-off contribution rose to 229,485 (203,174 in the previous quarter).

TISA Chairman John Brasington says: “It seems that the message is getting through that family and friends can contribute to a CTF as well as the parents. Although it’s more favourable for people to commit to regular direct debit savings, given the financial uncertainties facing many families we need to continue to encourage one-off contributions at a birthday and at Christmas to ensure that CTFs are as well funded as possible.”

Government will be introducing the second CTF payment later this year when holders who reach their 7th birthday will receive an additional contribution of £250. In addition up to £1200 can be saved into a CTF each year to provide a financial springboard when the holder turns 18.