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Savings surge into scrapped child trust funds

Savings surge into scrapped child trust funds

Category: Savings

Updated: 27/10/2010
First Published: 09/08/2010

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 It is now over 6 months old so the content may be out of date.

Contributions to child trust funds have continued to increase, despite the Government announcement that children born after the end of this year will not qualify for an account.

Monthly direct debit subscriptions to the child trust fund accounts now exceed £18 million, an increase of £1million on the previous quarter, according to TISA.

Meanwhile, the number of child trust fund accounts receiving a one-off lump sum subscription increased by 23,000 on the previous quarter, with the average contribution growing from £507 to £511.

In May, the Government announced that for children born from August 2010 to January 2011, the child trust fund voucher it provides will reduce from £250 to £50.

The accounts will be then be closed for children born after December 2010.

However, the scheme will remain open to existing account holders, with contributions up to the overall total of £1,200 per annum continuing to be permitted.

"Our survey points to the continuing popularity of the scheme and it is good news that subscriptions into existing accounts will still benefit from the tax free investment growth after the scheme closes to new applications," said Tony Vine-Lott, director general of TISA.

"It is unfortunate that the current fiscal constraints mean that the Government cannot continue with the child trust fund scheme in its present format.

"I hope that, in time, a successor to child trust funds will emerge that continues to encourage regular children's saving and helps to build financial literacy."

If you want to make sure your child has a financial head start in life, take a look at the best children's savings accounts currently on offer.

Find the best savings rates for your child - Compare savings accounts

Read our Changes to Child Trust Funds Guide

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 Any products featured may be withdrawn by their provider or changed at any time.

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