TRUST FUND VOUCHERS STILL NOT INVESTED
(16 January 2006)
has been one year since the Government launch of the Child Trust
Fund and almost one million vouchers have yet to be invested. Nationwide
Building Society encourages parents to invest their childs
voucher quickly in order to gain as much benefit from the investment
as possible. The Society issued a report on childrens savings
which calls on the Government to do more to ensure vouchers are
invested within the first three months of receipt.
amount children could receive from a cash Child Trust Fund will
vary significantly from around £1,000 for those who have just
the money provided by the Government, to around £9,000 for
those whose parents add £5 to the Child Trust Fund each week
and almost £40,000 for those parents who top up the account
by the full £1,200 each year. Children holding an equity Child
Trust Fund account could receive an even higher return.
conducted by Nationwide last year reveals that the larger the sum
of money received by children at the age of eighteen, the more likely
they are to spend it responsibly. The research examines how young
adults today would spend their Child Trust Fund lump sum on reaching
the age of eighteen and demonstrates the importance to parents and
relatives of topping up the fund.
a provider of both cash and equity Child Trust Funds
conducted the study among 17-21 year olds. Results suggest that
a young adult whose Child Trust Fund matures with a lump sum of
£40,000 would, on average:
over a quarter (27%) of the money for the future
Stash away 22% towards a deposit on a house
Spend only 10% on holidays and entertainment
Spend a mere 9% on shopping
contrast, children who receive a lump sum of £1,000 are more
likely to, on average:
19% of the money on shopping
Spend 20% of the cash on holidays and entertainment
Stash only 16% in general savings
Contribute only 3% of the money towards buying a house
very few young people said they would use the money for university
fees or further education, regardless of the size of the lump sum.
This presents a new challenge for parents and the Government who
may want to see children use their windfall towards meeting the
costs of tuition fees. The majority of university students would
use a substantial amount of their matured Child Trust Fund to clear
debts accrued while studying.
executive director, Stuart Bernau, said: Parents have a vital
role to play in demonstrating to children the importance of saving.
Mums and Dads can help children look to their future and consider
how best they use their Child Trust Fund. Whether it will be put
towards education, a first home or a wedding we believe the Child
Trust Fund will assist young people in understanding the value of
of older children who do not qualify for a Child Trust Fund may
also want to think about opening a savings account or investment
fund for them. Smart, Nationwides savings account for young
people, can be opened with just £1 and is one of the most
competitive childrens accounts available on the high street.
Alternatively, parents may opt for the Nationwide investment fund,
which can be opened on behalf of their child with a minimum of £20.