8 in 10 parents do not support plan to cut Child Trust Funds
72% unaware of potential threat to children’s savings
17th February 2010
Parents are almost universally against Conservative Party plans to cut the Child Trust Fund (CTF), according to research from Family Investments.
A study of 634 parents also found that 96% thought the CTF scheme was a “good thing”, with many stating that it encouraged them to save to secure their children’s financial future. Nearly a third of all CTF accounts receive regular top-ups, with an estimated two million parents and relations adding £22m a month to CTFs.
One of the Conservative Party’s key policy aims is to create a savings culture in the UK, yet they have outlined plans to cut the CTF for the majority of families. Currently this means that any family with a total household income of more than £16,040 will not get one. Almost three quarters of parents in our research were unaware of this potential threat to the universal CTF scheme and the same proportion said they would look upon a political party that introduced this change less favourably.
If the Conservatives’ current proposals go ahead, 560,000 newborn children a year will no longer be eligible for CTFs, which they claim will save them £300m a year. The Institute for Fiscal Studies, however, has put this figure closer to £225m.
John Reeve says: “The CTF is clearly creating a culture where parents save more for their children. Nearly a third of all CTF accounts receive regular top-ups, with an estimated two million parents and relations adding £22 million a month to CTFs.
“It is hard-working, low and middle income families who will be really hit by these spending cuts. These are exactly the kind of families who may want to save for their children’s future but need the help and encouragement to do so. To get rid of the CTF before the long-term benefits have been realised seems very strange.”
-ENDS-
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About Child Trust Funds
- The Child Trust Fund is a savings and investment account for children born on or after 1 September 2002
- 4.78m CTF accounts were opened up to Jan 2010
- Eligible children receive a £250 voucher to start their account. When the child is 7 years old, the CTF receives an extra £250 from the Government. Children in families with lower incomes automatically get an additional payment of £250 from the Government at birth and age 7
- The CTF is tax free
- A maximum of £1200 can be saved in the account per year
- Money cannot be withdrawn from the CTF until the child is 18 years old
- The first CTF account will therefore mature in 2020 when those children born in 2002 turn 18
About Family Investments
- Family Investments aims to be the trusted supplier of financial solutions for the family
- Family Investments currently looks after around £2.3 billion of family money for more than 1.5 million people in the UK
- Family Investments is a mutual with over 30 years experience providing investments for families. We are owned by our customers which means that we are directly answerable to them
- Family Investments is the UK’s favourite Child Trust Fund provider with 1.1 million Child Trust Fund accounts
- Our expertise is widely trusted and recognised, which is why we’ve been chosen to provide the Child Trust Funds of these high street names; Barclays Bank, Santander, Post Office, Sainsbury’s Bank, Yorkshire Bank, Clydesdale Bank, Coventry Building Society, Early Learning Centre, Northern Bank, Skipton Building Society and National Childbirth Trust, and additionally provide Post Office ISAs
- Family Investments won the Business in the Community Award in the 2009 Sussex Business Awards. This recognised Family’s highly successful community and volunteering work
- Family Investments is the trading name of Family Assurance Friendly Society and is authorised and regulated by the Financial Services Authority
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