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Child trust funds boosting savings

Child trust funds are changing saving behaviour, with more parents saving more money towards their children’s future, says The Children’s Mutual.

The company says it has seen an increase of 50 per cent in the number of new parents saving for children than before CTFs were introduced.

Before the launch of CTFs, research from The Children’s Mutual showed that only 20 per cent of parents saved for their children. Figures from the Treasury show this figure is now up to 30 per cent.

The Children’s Mutual has seen the average amount of monthly top-ups increase from 15 to 24, an increase of 60 per cent.

But the mutual warns the one million parents who have still not placed their voucher that they could be missing out on as much as 1,500, even by delaying only six months.

Chief executive David White says the main barrier to parents redeeming their CTF vouchers is regulatory small print. He says people are suspicious of the small print and adds that due to regulation, more than half of a 20-page product brochure will be small print. He believes the FSA needs to look at its regulations and finetune them.

White says over 75 per cent of CTFs accounts opened so far are stakeholder or equity-based accounts.

White says: “Parents with young children are time-poor and when faced with a myriad of providers it is easy to understand why they do nothing. However, we would urge parents who are unsure about where to put their CTF vou- cher to choose a stakeholder account and do it quickly.”

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