Child Trust Funds Ameliorate UK Savings Habits

Over GBP3.5 billion could have been injected into the UK economy this year if Child Trust Funds (CTFs) had been introduced 18 years ago, according to new calculations released by The Children's Mutual to mark the fourth anniversary of the

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Over GBP3.5 billion could have been injected into the UK economy this year if Child Trust Funds (CTFs) had been introduced 18 years ago, according to new calculations released by The Children’s Mutual to mark the fourth anniversary of the scheme going live.

The Child Trust Fund provider’s calculations also show that nearly half of today’s 18-year-olds could have received just over GBP9,975 each, based on real stock market performance since 1991 and its customers’ savings behaviour today.

Whilst past performance is no guide to what may happen in the future the figures being released demonstrate the potential future power of the CTF, and show how it could provide a generation of young adults with significant financial assets at age 18 which may help finance their aspirations and bolster the UK economy.

According to The Children’s Mutual, engagement with the Child Trust Fund remains strong despite current testing economic times. Since its inception in April 2005, more than four million Child Trust Fund accounts have been opened in the UK and nearly one million Child Trust Funds accounts (22%) are being topped up regularly through monthly direct debits by parents and wider family.

“The CTF was introduced to give every child a tangible financial asset when they reach 18,” says David White, chief executive, Children’s Mutual. “And recent financial history illustrates that saving over the long term can be far more robust than many people may think, making it undeniably important to individuals and the country alike.”

“On the fourth anniversary of the CTF going live, we are urging families with younger children to ensure they have plans in place to help tackle the cost of the future and to consider saving regularly over the long term.”

“We are encouraged that the increase in the number of families with more than one CTF eligible child hasn’t impacted on top up levels; in real terms this means that the level of commitment by parents is increasing all the time,” continues White. “We believe the CTF is changing the nation’s savings habits for the better and in recessionary times this is very positive news indeed.”

L.D.

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