CTF contributions still strong
Contributions to Child Trust Funds have continued to increase - according to the latest quarterly statistics from TISA - despite the government announcement that children born after the end of this year will not qualify for an account.
Representing 73% of all CTFs the survey - for the quarter to 15 June - shows that monthly direct debit subscriptions to the 3.8 million CTF accounts covered now exceed £18million (an increase of £1million on the previous quarter). The number of accounts receiving a one-off lump-sum subscription also increased by 23,000 on the previous quarter and the average contribution grew from £507 to £511. The total amount subscribed in lump sum contributions is now in excess of £162million.
In May the government announced that for children born from August 2010 to January 2011 the CTF voucher will reduce from £250 to £50. CTFs will be then be closed for Children born after December 2010. However the scheme will remain open to existing account holders with contributions up to the overall total of £1200 per annum continuing to be permitted.
Tony Vine-Lott, Director General of TISA says: "Our survey points to the continuing popularity of the scheme and it is good news that subscriptions into existing accounts will still benefit from the tax free investment growth after the scheme closes to new applications.
"It is unfortunate that the current fiscal constraints mean that the government cannot continue with the CTF scheme in its present format. CTFs were fulfilling their original objective of creating assets for young adults regardless of their background. The scheme also had the potential to improve the financial literacy of youngsters at a time when this is perhaps more important than ever.
"TISA is working with the government to identify how we can continue to provide the obvious social benefits at little or no cost to the State. I hope that in time a successor to CTFs will emerge that continues to encourage regular children's saving and helps to build financial literacy."