Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

The Child Trust Fund Reaches its Second Birthday

Personal_Finance / CTF May 09, 2007 - 12:18 PM GMT

By: Nationwide

Personal_Finance

But children are still losing out on a potential £7.5 million in the first 12 months

The Child Trust Fund recently celebrated its second birthday yet the latest Government figures showed that nearly a quarter of all Child Trust Fund (CTF) vouchers issued were not invested by parents within the 12 month time frame. Nationwide Building Society is calling on the Government to do more to encourage parents to invest their child's voucher sooner, so children do not miss out on significant interest or investment growth.


As at December 2005 about 2.2 million vouchers were issued, yet only 1.66 million of these were invested meaning 25% of vouchers had expired and those children have missed out on 12 months of interest or investment growth. Collectively these children have missed out on £7.5 million pounds or approx £14 per child over 12 months with these figures rising to £19 million or £35.30 per child over the 18 year term as their investment has been reduced to only 17 years.

By December 2006, almost 2.95 million vouchers had been issued by the Government, but only around 2.1 million of these have so far been invested by parents meaning that the vouchers of around 850,000 children are either expired or have yet to be invested.

In December 2006 Nationwide published the findings of research on the attitudes of MPs to CTF. 92% of Labour MPs felt that the Government should take measures to increase early take-up of CTF vouchers to ensure that children did not miss out on interest on, or growth of, the Child Trust Fund. Waiting 12 months before automatically investing the money for parents who take no action means these parents' children are losing out on a whole year's interest or growth in their fund.

Matthew Carter, Nationwide's divisional director mortgages and savings , said: "The Government needs to do more to encourage parents to invest their child's voucher as soon as possible and certainly before the 12 month expiry period otherwise, through no fault of their own, it is the children who are losing out on interest or investment growth.

"Parents need to recognise the urgency in presenting their child's voucher for investment to ensure their children receive the full 18 years worth of interest or investment growth that they are entitled to and not a year less. The Government has said that its aim is to entrench a culture of saving for people of all ages. However, they still need to get a quarter of parents on side and in doing so could make a real difference to so many young people, giving them a nest egg to start their adult lives."

For further information:

Sue Knight, media relations manager, telephone: 01793 655196 email: sue.knight@nationwide.co.uk
Steve Blore, senior manager, telephone: 01793 655199 email: stevew.blore@nationwide.co.uk

Notes:

  • Nationwide offers both cash and equity Child Trust Fund (CTF).
    Nationwide's equity CTF:
    • is a unit trust based investment that aims to increase in value by tracking the performance of the FTSE All-Share through the Nationwide Tracker Fund
    • is a Stakeholder fund, so it has low charges and further contributions can be made from just £1
    • is flexible, so customers can invest as and when it suits them, subject to annual allowances
    Nationwide's Cash CTF:
    • is a tax-free savings account paying a variable rate of interest. As it is a savings account, it is secure – children are guaranteed to get back every penny invested, plus interest and any bonus paid
    • currently pays a competitive rate of interest of 5.55% AER, or 6.55% if £240 or more is paid in each year (excluding Government contributions)
    • guarantees to pay at least 1.30% (including conditional bonus) more than the Bank of England Base Rate until 1 January 2010
    Cash CTF AER* AER Gross p.a.
    £1 and over 6.55% 5.55% 6.55%

    *Including additional bonus of 1.00% gross p.a. which will only be paid if £240 or more is paid in to the account each year. This does not include Government contributions.

  • Case studies are available, please contact the press office
  • Child Trust Fund figures used as published by the Government in March 2007 can be found at http://www.hmrc.gov.uk/stats/child_trust_funds/ctf-mar07.xls
  • As at December 2005, 2.193 million vouchers had been issued of which 1.656 million had been invested. Leaving 25% or 537,000 Child Trust Vouchers expired
  • If a Child Trust Fund (CTF) account is not opened before the expiry date on the voucher then HM Revenue & Customs (HMRC) will open an account on their behalf. HMRC will open a stakeholder CTF account for the child and will advise the parents which provider the account has been opened with. Parents can change the account to another type of account or provider if they wish.
  • The Government's own research indicates that 98% of eligible parents are aware of the Child Trust Fund ( www.hmrc.gov.uk/ctf/statistical-report-2006.pdf )

    Calculations:

  • Assuming a £250 voucher is deposited into a cash CTF at the first opportunity, allowing for the age 7 top up and no other contributions being made, after 18 years the value of the investment would be £1,113.86 (calculations assume an interest rate of 5.55%)
  • Nationwide calculates that through not investing the voucher straightaway £13.88 is lost in interest during the first year and by the time the CTF matures this lost interest will increase to a total of £34.76 calculations assume an interest rate of 5.55%)
  • Assuming a £250 voucher is invested in to an equity CTF at the first opportunity, allowing for the age 7 top-up and no other contributions being made, after 18 years the value of the investment would be £1,128.47 (calculations assume a projected growth rate of 7% and include a management charge of 1.5%)
  • Nationwide calculates that through not investing the voucher straightaway £14.10 is lost in growth during the first year and by the time the CTF matures this lost growth increases to a total of £35.84 (calculations assume a projected growth rate of 7% and include a management charge of 1.5%)

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules