Child trust cash not invested by ‘distracted’ parents
About 25% of Child Trust Fund (CTF) vouchers given to children are not being invested by their parents within the 12-month deadline.
All eligible children born after 31st August 2002 receive a free voucher for £250, rising to £500 for poorer families. Parents get up to a year to invest the money in a CTF account – cash, stakeholder or equity are permissible – before the money is given to a provider in default of one chosen by the parents.
While more than 2.6 million accounts have been opened, many parents have opted to do nothing with the money. A spokesperson for a High Street savings account provider said: “I’m not surprised that so many people don’t use their entitlement and save into a CTF.
“New parents have a lot on their minds and are distracted from some of the more mundane tasks they should be undertaking when they have children. Opening a savings account, even with money given to you by the Government, may not be the most pressing requirement on their minds.”
He continued: “But people are missing out on a good opportunity to get their children started with a nest egg if they don’t use a CTF. Parents and relatives can invest up to £1,200 a year thereafter which can grow tax-free, which could grow into a pretty healthy sum in future years.”