More than 3 million children now have a Child Trust Fund
Account (CTF) according to the latest figures from HM Revenue and Customs (HMRC).
Last year saw a surge in popularity for Child Trust Funds following the Government initiative to help publicise the savings scheme, in particular a cash incentive to help encourage low income families to open accounts, and now, 3.23million children have a CTF.
Almost half of new CTF accounts opened in 2007 had a monthly direct debit set up at the same time, a nine per cent increase from 2006 figures. The average monthly amount currently being saved by direct debit is £23.41 - a four per cent increase since 2006 while cheque deposits have also increased by seven per cent. At this rate of saving, by the time the child reaches 18 and the CFT matures, they could receive a lump sum of £9,500.
David White, Chief Executive of The Children’s Mutual, comments: "The CTF is set to change the lives of a whole generation. Our figures show that family engagement with the CTF has increased hugely, with more and more families now saving regularly for their children. Every eligible child under five and many five-year-olds now have a CTF, meaning that the UK is now home to the first ever generation with a promising financial future.
"Before the CTF was introduced, just one in five families was saving regularly for their children; this has now leapt dramatically and in 2007 almost half of new CTF accounts placed with us received monthly top ups from the outset. And families of every social background are saving, meaning the CTF really will help to provide a financial springboard into adulthood for the Trust Fund Generation."
Online applications and deposits have also seen a boost. Children's Mutual reported that 27 per cent more CFT customers opened accounts and topped up online in 2007, which is in part due to the introduction of a new online debit card top up facility.
Mr White adds: "The first CTF vouchers were issued nearly three years ago and in such a short space of time it is fantastic news that so many families are realising the importance of saving for their children. Anyone can top up a CTF account and we are urging parents to talk to grandparents, wider family and friends to help with saving for children as just an extra £10 a month in addition to other contributions over 18 years can make a big difference – potentially adding an extra £3,600 to a child’s CTF pot.
"By saving regularly over the long term, families can help their children to start out in adult life with a lump sum to help towards the cost of the future. And with careful planning and saving they could also avoid the nightmare being faced by parents of today’s 18-year-olds who often have to raid their savings and retirement funds to give their children a financial head start."
© Fair Investment Company Ltd