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Child Trust Funds to become voucherless

Child Trust Funds to become voucherless

Category: Savings

Updated: 27/10/2010
First Published: 06/04/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The four year anniversary of Child Trust Fund (CTF) will be marked by the process switching to a voucherless system.

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.

Until now, parents had to supply a paper CTF voucher to open a savings account for their child.

From today, that process will become simpler, as parents are able to open a CTF online or over the phone without having to then send a voucher to the provider.

Robert Reeve, chief executive of Family Investments, commented: "Our experience suggests that many parents would be more likely to set up their child's CTF if they were able to do so online or by telephone in one simple transaction, so we are pleased the Government has taken the positive step of addressing this issue."

Those sentiments have been echoed by The Children's Mutual, which said that the move to a voucherless system could increase the number of actively placed CTFs by up to ten per cent.

"We believe the CTF is changing the nation's saving habits for the better and in recessionary times this is very positive news indeed," said David White, chief executive.

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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 Any products featured may be withdrawn by their provider or changed at any time.

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