Parents favour cash-based Child Trust Funds |
|
|
|
Published
:
Mon, 21 Mar 2005 01:00
|
Building societies said that more and more people, especially parents, are now opening cash-based Child Trust Funds (CTFs) compared to equity-based CTFs.
Other financial institutions such as Abbey, Nationwide and Britannia, who offer both cash-based and equity-based CTFs, also said the demand for cash version was comparatively higher.
| Nationwide said it was receiving 2,500 applications through a day and 36 per cent of these were for the equity accounts. Similarly, at Abbey, 40 per cent of CTF applications were for equity-based accounts and 60 per cent were for cash versions. Britannia said 80 per cent of applications received were for the cash CTF.
“The reason for investors choosing cash-based CTFs is because they like the simplicity and understand the concept,” said Halifax spokesman Gareth Mackie.
But Britannia spokesperson David Ginivan said: "CTFs is just not on top of people’s agenda." He said: “We asked 1,000 people, whose children were eligible for these accounts, what type of gifts they would give to their children in a typical year. We were expecting the usual clothes, DVDs and computer games, but for savings not to even figure in the top 12 was alarming.”
He said: “Unless and until parents top these funds each year, they are not going to be worth anything."
Meanwhile, Chancellor Gordon Brown’s Budget announcement last week, whereby the Treasury will consult on whether to give eligible children a third payment when they reach secondary school age, was well received by the industry.
CTF works by allowing parents of any child born on or after 1 Sept. 2002 to open an account with a voucher worth at least 250 pounds. A further 250-pound voucher should be received by the account holders when the child is seven years of age. There is an option whereby the parents can make additional contributions of 1,200 pounds a year till the child attains 18.
|
|
|
|
|
|
Print this Story
