A CTF is a long term investment plan and can be saved into by parents, family or friends at a maximum input rate of £1,200 per year.

The government also provides a £250 pound voucher toward the fund to all those children born on or after September 1st 2002.

However, solely relying on this fund can be a risky strategy for parents, as there is a danger that the child may rapidly spend the savings after gaining access to the money when aged 18.

Commenting on the benefit of setting up a pension for your child alongside a CTF, Anna Bowes, investments manager for AWD Chase de Vere, said: “I think a pension is a great idea. When they get to that retirement age and they’ve potentially got a very large sum of money in their pension, and that’s going to give them a good, safe income.”

AWD Chase de Vere is one of the UK’s largest Independent Financial Advisers with over 400 professional advisers.

Find out more about pensions

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