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Child Trust Fund contributions rise as they near an end

Child Trust Fund contributions rise as they near an end

10 August 2010 / by Lois Avery

Child Trust Fund contributions are still on the up despite the Government’s decision to suspend CTFs at the end of this year.

New research has shown that contributions into Child Trust Funds for the first quarter of this year were up, suggesting that they remain a popular savings method for parents.

According to the Tax Incentivised Savings Association (TISA) monthly direct debit subscriptions to the 3.8 million CTF accounts exceeded £18million up until June this year, 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.

This news comes after the Government announced in May 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.

But 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 said: "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.”

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