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Child Trust Funds receive over £5 million a week

1st April 2010 Print

Over £700,000 a day - £5 million a week - is currently being invested in Child Trust Funds according to leading Child Trust Fund (CTF) provider, The Children's Mutual.

As the UK's first universal savings product reaches its fifth birthday, these figures give a clear indication that over the last five years the actions of parents, families and friends have changed the savings habits in the UK, for the better.

Prior to April 2005 less than one in five parents were saving for their children's future. However since the launch of the CTF this figure has rocketed to three in five.

David White, Chief Executive of The Children's Mutual said: "Given recent economic problems it is essential that the UK reignites its savings culture. In five short years there has been a 200 per cent increase in the number of people saving for their children over the long term and the Child Trust Fund has been the catalyst. This is nothing short of phenomenal, given the uncertain financial backdrop many families have faced."

Since April 2005 parents of five million children who now have a CTF have used them as a means to change their savings habits:

Currently 1.4m parents, family and friends are contributing to their children's accounts with in excess of £22m being added every month

Nearly three quarters of parents choose to proactively open their child's CTF, which is a significantly higher engagement rate than ISAs and pensions

The average direct debit payment made by parents into CTFs held with The Children's Mutual is £24 - if this amount were paid monthly throughout the life of the account, it could result in a lump sum of £9,750 upon maturity after 18 years.

This commitment from parents and Government towards saving for children's futures may mean that an estimated £2.96 billion will be available to young adults each year as they turn 18 - a significant amount towards the increasing costs of adulthood such as buying a car, attending university and getting onto the property ladder.

April this year also marks the beginning of additional payments into CTFs for disabled children who are entitled to Disability Living Allowance. These additional yearly payments of £100 or £200 for severely disabled children could mean an extra £3,000 at age 18 or £6,000.

David White concludes: "The introduction of additional payments for disabled children is crucial as it reflects the additional costs that disabled young adults and their families may face. Along with Government we hope that the additional money will help to enable these children have a smooth journey into adulthood."