Child Trust Fund contributions on the up

Category: Savings
Date: 7/1/2009

Lump sum subscriptions to child trust funds (CTFs) have risen to their highest ever level, with the average sum now £525.

Average lump sum subscriptions have now recorded a rise for the third quarter in succession, according to a survey by the Tax Incentivised Saving Association (TISA).

In the previous two quarters, the average contributions were £516 and £483 respectively.

As much as £1,200 a year can be saved into a CTF account each year to provide the holder a significant financial springboard when they turns 18.

The upturn means that 8.7 per cent of CTFs have now received a lump sum contribution, a marked improvement from the 5.5 per cent that was recorded when the survey began in August 2006.

In total, the number of funds that have benefitted from a one-off payment has risen to almost 230,000, up from just over 203,000 in the previous quarter.

"It seems the message is getting thought that family and friends can contribute to a CTF as well as parents," commented TISA chairman, John Brasington.

"Although it's more favourable for people to commit to regular direct debit savings, given the financial uncertainties facing many families, we need to encourage one-off contributions at a birthday and at Christmas to ensure that CTFs are as well funded as possible."

Later this year the Government is to introduce a second CTF payment, meaning an additional £250 contribution will be made when holders reach their seventh birthday.