Many parents fail to invest child vouchers

Apr 9 2008 Western Mail

NEARLY a third of Child Trust Fund vouchers are going unused, three years after the government scheme was launched.

HM Revenue & Customs figures showed that 30% of the vouchers issued at the end of 2006 had not been invested after 12 months, up from 24% when the scheme was first introduced.

Since 2005 about 750,000 Child Trust Fund vouchers have expired without being used by parents to open an account for their child.

All children born on or after September 1, 2002, have received a £250 CTF voucher to be invested on their behalf, with children from less-well-off families receiving £500.

The Government makes a further contribution when children are seven, and family and friends can pay in up to £1,200 a year.

Vouchers that are not used within 12 months of being issued are automatically invested into a low-cost stakeholder fund for the child by the Government.

Jason Hollands of F&C Investments said: “This suggests that vouchers which are collectively worth literally millions of pounds, have either been chucked in the bin, or left languishing in drawers or stuffed behind the sofa.

“The announcement in the Budget that in future it will no longer be necessary to submit a physical voucher may help improve things.

“However, the pattern in the data suggests that awareness has subsided a little since the initial noise and Government promotion at the inception of the CTF.”

Meanwhile, research carried out for The Children’s Mutual found that the majority of children would save any money they received from a CTF.

Around 57% of children aged between 11 and 18 said if they received £20,000 when they were 18 they would save the money, with putting it towards the cost of university and using it for a deposit on a house the second and third most popular options.

But parents were more likely to think their children would spend their funds, with 42% saying they thought they would splash out on material goods, while 19% thought their offspring would blow the cash on having fun.

YouGov questioned 1,000 parents and Dubit questioned 1,000 11 to 18-year-olds