More than five million children have now opened a Child Trust Fund (CTF) since the savings account was launched back in 2005, according to the latest data from Her Majesty's Revenue and Customs (HMRC).
Celebrating its fifth anniversary this month, the Child Trust Fund – a savings account designed to help children born on or after 1 September 2002 build lump sum that can be withdrawn when they turn 18 – now has over five million subscribers, while more than £500million has been saved by family and friends since its launch, according to research by Family Investments.
Welcoming the news, David White, chief executive of The Children's Mutual believes this is a "significant milestone".
"It is significant for the families who have engaged and are preparing for their children's futures. But it is also significant for the providers who have made huge strides in engaging and supporting parents to help them with their financial decisions," he said.
According to The Children's Mutual, prior to the Child Trust Fund's introduction, less than one in five parents were saving for their children's future, compared to three in five parents today.
"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," Mr White added.
Looking ahead to when the first children of the Child Trust Fund generation can withdraw their funds, CTF provider Family Investments has predicted that they will able to inherit a combined £2.5billion each year.
Commenting, John Reeve chief executive of Family Investments said: "The CTF is a groundbreaking savings initiative that means every eligible child in the UK will now have a savings pot once they reach age 18. The CTF will make an enormous difference to the social and economic fortunes of a generation and help develop a savings culture in the UK when we most need it."
© Fair Investment Company Ltd