CTFs boost grandparents' contribution to child savings

Posted in: Research Last updated: 25 Apr 2008

Child Trust Funds have made a considerable difference to the amount of money saved by grandparents for children, according to new research from engageMutual.

engage Mutual Assurance, a leading provider of CTFs, and a pioneer of low minimum direct debit payments of £5 per month, polled over 550 of its customers in order to discover how the introduction of CTFs has changed their attitudes toward child savings. Whilst parents have been encouraged to save more for their children since the introduction of CTFs (53%), grandparents are also taking savings for their grand-children more seriously – one in five saying that CTFs have encouraged them to save more for their grandchildren (21%).

grandpas contributing by Direct Debit
Grandpas are the most conscientious for their grandchild’s future, 30 per cent paying into their grandchildren’s CTF, and these payments are not all ad-hoc. 42 per cent of grandparents contributing to CTFs do so through regular direct debit payments, reflecting the proportion of engage CTF’s receiving a monthly top-up, which is 20% higher than the industry average.*

hopes for grandchildren’s future
74 per cent of the grandparents surveyed feel that it is important to save equal amounts for all of their grandchildren in order to give them equal opportunities. In contrast to parents who were most likely to anticipate that the money in their CTFs will go towards their child’s first property purchase (46%). Most grandparents are likely to hope the money will help to cover the escalating costs of university (77%). 41 per cent envisage the money going towards property and one in ten believes it will help their grandchild to set up a new business (11%). Just 18 per cent of grandparents were worried about how their grandkids would spend the money invested for them.

other routes to saving
As well as contributing towards CTFs, grandparents are also investing elsewhere. 46 per cent of those questioned said that they have set up a deposit account for their grandchild’s future.

Karl Elliott, spokesperson for engage Mutual commented:

“engage encourages the whole family to play a role in investing for the future of their children. Our ongoing research into family finance shows that family members are very interdependent upon each other when it comes to financial matters.

By providing a minimum top-up rate of £5 per month into its CTF, engageaims to make investing for children affordable, giving the opportunity to save little and often further into the future.”

*Based on engage data and research carried out by the Tax Incentivised Savings Association (TISA), January 2008

engage Mutual Assurance CTF Product Information

  • please note this is a stockmarket-linked investment and its value can fall as well as rise. The child may get back less than has been paid in.
  • the annual charge is 1.5%
  • the minimum contribution is £5
  • the child’s cash lump sum payout at the age of 18 will depend on investment performance, and cannot be guaranteed
  • once money is paid into the CTF, it is ‘locked in’ and can be accessed only by the child and not before they reach age 18, except as permitted by CTF regulations.
  • the tax treatment of CTFs may change in future.
  • although our CTF account is a Stakeholder CTF which meets certain Government standards, this does not mean that the investment is suitable or that its performance is guaranteed.
  • we do not give advice on investments, in the case of doubt as to the suitability of this product independent advice should be sought. Such advice may involve a charge.

engage Mutual Assurance can be contacted on 0800 169 4321 or by visitingwww.engagemutual.com

The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.

notes to Editors:
1. the research is based on engage Mutual internal data from a base of 556 customers
2. engage Mutual Assurance is a trading style of Homeowners Friendly Society (HFSL) and it’s wholly-owned subsidiary engageMutual Funds Limited (EMFL).
engage Mutual Funds Limited (EMFL) is the provider of the engageChild Trust Fund
3. engage supports mutuality, friendly societies and the regional financial services industry through links with the Association of Mutual Insurers, the Association of Friendly Societies, Mutuo and Leeds Financial Services Initiative.
4.established in 1980, Homeowners Friendly Society Limited (HFSL) is Registered and Incorporated under the Friendly Societies Act 1992, Reg.No.964F, it’s wholly owned subsidiary engage Mutual Funds Limited (eMFL) is Registered in England No 3224780. Both are authorised and regulated by the Financial Services Authority (FSA).
5.Homeowners Friendly Society Limited’s FSA Register number is 110072 and engage Mutual Funds Limited’s FSA Register number is 181487. You can check this on the FSA’s Register by visiting the FSA’s website www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234