As the fifth anniversary since Child Trust Funds (CFTs) were introduced approaches, Nationwide has revealed that 60 per cent of parents have not made any additional payments into the accounts.
The building society is encouraging parents to make some form of monthly contribution, even if it is a small one so that savings will have grown to a significant sum by the time children reach adulthood.
“We are disappointed that so few funds see additional top-ups because just by saving even the smallest amount, parents, family and friends can ensure that every eligible child, when they turn 18, will have a substantial amount of money saved,” said the company’s savings director, Matthew Carter.
However, according to research from The Children’s Mutual, 43 per cent of parents are contributing an average £24 a month and that, if this continues, funds could accumulate £9750 in 18 years’ time. The group also explains that anyone can pay into the account and that, if both sets of grandparents were to pay £24 a month into the account, the lump sum available at 18 could increase to £27,070.
Chief executive of The Children’s Mutual, David White, also commended the decision of almost 80 per cent of parents who have opted for share-based CTF accounts (either stakeholder or non-stakeholder).
“Although the value of shares can go up and down, historically they have outperformed cash over the long term and we are keen that parents understand this when making their investment decision,” he said.
HM Revenue and Customs has revealed that almost three million CTF accounts have now been opened.
Mr Carter explains an additional benefit offered to children by the scheme: “As they grow up they will see their funds grow with them and on reaching adulthood will hopefully have developed a savings habit which they will continue.”
He advises parents to invest the government voucher as soon as possible so that they can benefit from a full 18 years of tax-efficient interest.
Find out more about child investment
and Child Trust Fund accounts