The Children's Mutual reports CTFs have revolutionised child savings

Thu, 11 Feb 2010 10:18:33 GMT

The Children's Mutual, a leading Child Trust Fund provider, has revealed new research that, five years on from the first CTF vouchers being issued, the introduction of the CTF has revolutionised long-term savings for children.

With every eligible child born since 1 September 2002 having a CTF account, 2010 will see more than five million children holding CTFs.

The Children's Mutual has revealed that around half of their CTF customers set up a monthly direct debit on the day they open their child's account. If you look at wider industry statistics, 31% of CTFs receive some form of additional saving. Before the Child Trust Fund was introduced, just one in five families were saving over the long-term for their children.

In addition, while nearly three quarters of parents choose to proactively open their child's CTF account, a survey by the awards winning Child Trust Fund provider found that when asked over one in 10 parents with CTF vouchers were opting to let the government open the account for them - making an engagement rate of 85%. Compared to engagement rates of other savings products - 40% of the adult population has a private pension and 30% have an ISA - the CTF has driven the UK adult population to engage.

The Children's Mutual also found that currently 1.4m parents, family and friends are contributing to their children's accounts with in excess of £22m being added every month - money set to help towards the cost of higher education, first homes and beyond. As a result they estimate £2.74 billion will be available to young adults each year as they turn 18.

According to its calculations, 50% of the government CTF investment so far is going to 1.5 million families on the lowest incomes (under £15,000), with families in the lowest income bracket saving a higher proportion of their household income for their children than those in more affluent groupings.

David White, chief executive of The Children’s Mutual, said: "To those of us involved with the CTF, five years has gone by in the blink of an eye. And yet in that short amount of time, the results have been startling - the CTF has done what no other savings account has achieved before - getting the mass UK population engaged and saving. We're delighted that parents have engaged with the first universal savings scheme, realising that the only realistic way to fund their adult children's futures is to start saving now."

Child Trust Funds are designed to provide a tax efficient, long term savings vehicle for all eligible children. Each eligible newborn child (born on or after 1 September 2002) receives a £250 Child Trust Fund voucher (£500 for low income families) from the government when their parents register for Child Benefit. The government will make a second contribution of £250 (£500 for low income families) when the child reaches seven and is considering a third in the child's teenage years. Parents, family and friends can all then add to this account up to a maximum value of £1,200 each year.

Please view our footnotes.

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About The Children's Mutual - Home of the Child Trust Fund
The Children's Mutual's mission is to help parents, grandparents, family and friends fulfil their hopes for today's children. The Children's Mutual is the only UK company that specialises in long term savings for children and is now the choice of one in four parents for their child's The Children's Mutual, said: "We've had lots of new children on our books in the past 12 months, with almost 150,000 new accounts opened, and it's always interesting to see how the trends in babies names change each year. We realise that choosing a name can be daunting for parents as they want to give their child the best start in life.

"As well as the choice of name, parents should also be considering their child's future and how they plan to save for important milestones such as university or a first car. If parents top up their child's CTF monthly by £24 - the average amount saved by customers - these 2009 babies could receive a lump sum of over £9,750* when they reach 18."

Child Trust Funds are designed to provide a tax efficient, long term savings vehicle for all eligible children. Each eligible child (born on or after 1 September 2002) receives a £250 (£500 for low income families) Child Trust Fund voucher from the Government when their parents register for Child Benefit. The Government will make a second contribution of £250 (£500 for low income families) when the child reaches seven and potentially a third in the child's teenage years. Parents, family and friends can then add to this account up to a maximum value of £1,200 each year.

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Notes to editors
Research based on 149,847 new customers joining The Children's Mutual August 2008-09.
* Projected value based on £24 monthly investment (plus initial £250 Government voucher and another £250 at age 7) for 18 years in a stakeholder CTF account - assumed investment return of 7% per year with charges of 1.5% of CTF account value each year. Projected values cannot be guaranteed because the value of shares goes up and down. Final payout could be more or less than this.

About The Children's Mutual - Home of the Child Trust Fund
The Children's Mutual's mission is to help parents, grandparents, family and friends fulfil their hopes for today's children. The Children's Mutual is the only UK company which specialises in long term savings for children and is now the choice of 1 in 4 parents for their child's CTF, with more than 700,000 accounts. This expertise has led several financial institutions and family-focused high street retailers to choose

The Childrens Mutual finds parents prioritise childrens dreams

Sat, 04 Jul 2009 00:01:57 GMT

According to The Children's Mutual over 5.5 million* young people in the UK are receiving financial help from their parents in order to realise their dreams and aspirations. In some cases this could lead to their parents abandoning their own dreams for the future and potentially undermining their finances.

The research by the leading Child Trust Fund provider illustrates the finances that can be needed to realise an adult child's ambitions and The Children's Mutual is encouraging parents of today's younger children to consider saving now if they want to be able to afford both these and their own retirement dreams.

Many parents of today's 20 something's have had to raid their own savings or sacrifice their retirement goals in order to help their adult children fulfil theirs. After spending years saving to fulfil their long-standing future plans, parents are finding that when the time comes the funds won't cover the aspirations of both generations.

28%** of today's 25 year-olds have financial support from their parents towards education, 23%*** towards their rent and 19%*** have financial support from their parents towards holidays and trips abroad.

David White, Chief Executive, The Children’s Mutual, commented, "We are highlighting to parents of younger children that by starting to save for their child's future now, they can help avoid the struggles faced by the baby-boomer generation who regularly sacrifice their own dreams for those of their children."

Research from The Children's Mutual shows that 80%** of today's 18 to 25 year-olds believe they can be 'financially independent' while still receiving financial support from their parents and 66%*** of those who are 'completely financially independent' still get some form of financial support from parents.

Starting to save small amounts regularly over the long-term into Child Trust Funds, is one way parents of today's children could stand a better chance of fulfilling their own desires alongside being able to provide for their children as they enter adulthood.

David White continued; "Making the step into adulthood is often a strain financially. But from 2020 all 18 year-olds will be receiving their Child Trust Fund and those whose families have managed to save the maximum amount of £1,200 each year will have a fund that could be worth £37,100**** upon maturity. Those who save the average amount amongst our customers of £24 a month could have a fund worth £9,750 (based on investing £24 a month) when they reach age 18."

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Notes to editors
* 6,309,156 (UK 18-25 year olds - source: statistics.gov.uk) / 100 x 87.2 (18-25 year olds who have had financial help from their parents according to The Children's Mutual's Financial Independence Report 2009) = 5,501,584
** Financial Independence Report commissioned by The Children's Mutual February 2009
*** ibid
**** Projection includes monthly investment (plus £250 government vouchers at birth and age 7) for 18 years in a stakeholder CTF account. Assumed investment return - 7% a year, with charges of 1.5% of the CTF account value each year. Projected values cannot be guaranteed as shares can go up or down. Final payout could be more or less than this.

About The Children's Mutual – Home of the Child Trust Fund
The Children's Mutual's mission is to help parents, grandparents, family and friends fulfil their hopes for today's children. The Children's Mutual is the only UK company that specialises in long term savings for children and is now the choice of 1 in 4 parents for their child's Child Trust Fund, with

The Childrens Mutual finds parents prioritise childrens dreams

Fri, 03 Jul 2009 16:22:57 GMT

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The Children's Mutual reports CTFs have revolutionised child savings

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