The number of Child Trust Funds (CTFs) opened fell slightly in the last quarter, according to HM Revenue and Customs. The disappointing news follows a report by engage Mutual which found while the UK has one of the highest levels of income inequality in the developed world, more than half of the country's low income parents are unaware of CTFs. The scheme entitles children born on or after 1 September 2002 to a £250 voucher (£500 for low income families) followed by the same sum on the child's seventh birthday. Accounts are automatically opened by the Government if parents fail to open one within 12 months of receiving the voucher. More than one in four CTF accounts are opened in this way, meaning the full potential to grow the savings pot with regular or one off contributions up to the age of 18 will not be realised. However, the process by which parents set up accounts for their children is set to become easier from 6 April as parents will be able to open them over the phone or online, rather than having to produce a voucher to their provider. "HMRC's latest figures demonstrate that big changes are still needed to reduce the number of Revenue Allocated Accounts and encourage take-up by parents," said Kate Baker, head of savings and investments at Family Investments. "CTFs can have a real and positive impact on social mobility, but only if parents are encouraged to engage with the scheme from the birth of their child."
Find the best savings rates for your child - Compare savings accountsRead our Changes to Child Trust Funds GuideDownload FREE Child Savings Plan brochures
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.