One in four parents are failing to use their Government vouchers to open child trust funds (CTFs) for their offspring, figures showed today.
Around 26% of the vouchers have expired without being used to open one of the accounts, according to HM Revenue and Customs.
The situation is even worse for the most recently-issued vouchers, with just 39% of vouchers sent out during the third quarter of last year being used so far, although they remain valid for 12 months.
Since the scheme was first launched in January 2005, a total of 910,000 vouchers have expired without being used, while a further 355,000 that still remain valid have so far not been used to open a CTF.
If parents fail to use the voucher to open an account for their children within 12 months, the Revenue automatically opens one on their behalf.
By December 15 a total of just over four million CTFs had been set up, including the accounts opened by the Revenue.
The industry remains bullish
David White, Chief Executive of The Children’s Mutual said: “This latest report shows that over four million children aged up to six and a quarter are now in possession of a Child Trust Fund.
This gives each of these four million an opportunity to enter adulthood with a tangible financial asset, something that both today’s 18 year olds and their parents will almost certainly wish they’d had.”
There are three main types of CTF – savings accounts, stocks and shares accounts and stakeholder accounts. The first option does not invest in shares and is the safest option.
Stakeholder CTFs have a management fee of 1.5% and many people will have seen their investment decrease over the last year as the FTSE 100 has crashed. Parents will hope that their investment recovers and produces attractive returns in the long term.
Visit our website for Best Buy cash CTFs.
For daily consumer news, subscribe to the here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml . Find out more about RSS in the Which? guide to news feeds.