The mystery is increasing around the Child Trust Fund as the Inland Revenue starts to automatically allocate vouchers that haven’t been claimed within a year of issue to registered providers. These organisations are eager to find out why these families haven’t claimed their free money.
The minimum £250 voucher – whilst a drop in the ocean for Brad and Angelina – is equivalent to 20% of an average couple’s monthly disposable income, or a one month income tax holiday1. This is a significant sum for an average family with a new addition to provide for.
What’s more, a UK-wide poll asking people what would drive people to start savings revealed that ‘tax efficient investment vehicles’ (48%) were seen to be a more important trigger than a rise in interest rates (30%) or an upturn in the stock market (28%)2. Parents can invest £1200 in the tax-exempt Child Trust Fund, which indicates that the scheme itself is ticking the right boxes. There may still be confusion, however, in communicating the key messages to those eligible.
Karl Elliott from Engage explains:
“Our key aim with revenue allocated accounts is to ensure that these customers know exactly what it is they’ve got. There are different types of account, so we have to make families aware of the risks and rewards as well as the importance of saving for children. We support the government’s CTF advertising campaign – but think it should now go one step further by putting saving for children at the top of the national agenda, with a heavyweight campaign to match the drink drive or no smoking advertising.”
Engage is working hard to encourage regular saving into CTF accounts, with 50%3 of its customers making regular contributions compared with a survey average of 26%3. Engage believes higher levels of saving should be encouraged now, so today’s ‘buy now pay later’ generation can help prevent their children from falling into the same habits.
2Engage Mutual Assurance MIS
3BDRC Syndicated Survey Wave 6 Jan – Jun 2005. Objectives: to establish parental awareness of the CTF, patterns of registration behaviour, savings intentions, account opening intentions and use of CTF funds.