Lower minimum top-ups increase accessibility of CTFs

Posted in: Products Last updated: 06 Feb 2008

Following reports last week that Child Trust Funds, designed to give poor children a modest nest egg when they turn 18, are favouring the middle classes*, engageMutual, a leading provider of CTFs, is urging other providers to drop the minimum top-up rate for CTFs.

The engage Mutual CTF is one of the few Child Trust Funds to have a minimum direct debit top-up rate of £5 per month and, perhaps as a result engage CTFs have a higher than average direct debit take up rate of 28.2% compared to the TISA average of 23.4%**.

Contrary to suggestions that low-income families tend to avoid savings like CTFs which cannot be touched*, data from engage Mutual’s CTF customer base shows that lower income [1] families are topping up their children’s CTFs by a higher proportion of their incomes than higher income parents [2]. Lower income families invest 1.1 per cent of their post-tax monthly salary [3] into their child’s CTF which is almost double the proportion saved by higher income families, who set aside just 0.6 per cent of their monthly salary [4].

While both income groups have increased the regular monthly amount they are saving for their children since the launch of the CTF initiative in April 2005, lower income families are again ahead of the game. This group has increased the amount saved by nine per cent since May 2005, with higher income families topping up eight per cent more each month.


  1. Referred to in segmentation terms as the Blue Collar Enterprise group (see notes to editors)
  2. Referred to in segmentation terms as the Symbol of Success group (see notes to editors)
  3. Average annual salary is £21,495, post-tax is £16,393. Monthly take-home is £1,366
  4. Average annual salary is £47,952, post-tax is £34,000. Monthly take-home is £2,833

Karl Elliott, 3GB spokesperson for engage Mutual said:

“As a leader in the child savings market, and with just over 60% of our CTFs being taken out online, engage is committed to making it easy for everyone to save little and often for their child’s future. Enabling parents to pay as little as £5 per month by direct debit into their child’s CTF makes it more affordable to all families.”

“Regardless of household income, everyone should be encouraged to save for their children’s long term future. We would urge parents to seriously consider setting aside a small amount of money on a regular basis. They could be surprised to see how monthly instalments add up over the long-term.”

*The Times, Friday 18th January,http://business.timesonline.co.uk/tol/business/money/savings/article3207327.ece

**BBC Online, Thursday 17th January 2008,http://news.bbc.co.uk/1/hi/business/7193573.stm

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
  • the value of the child’s savings can fall as well as rise and they may not get back as much as has been invested for them
  • 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 visiting www.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).
  3. engage Mutual Funds Limited (EMFL) is the provider of the engageChild Trust Fund
  4. 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.
  5. 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).
  6. 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