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Awareness of CTFs to be raised
An ongoing news story this month has been the debate regarding awareness of child trust funds (CTFs), driven by CTF Week, which ran from January 15th to 19th.
The first few days of 2007 saw parents being advised by Yorkshire Bank and The Children's Mutual to start saving for their child by investing their CTF voucher or putting money into another savings account designed for children.
Among those who invest in their child's CTF fund, it has emerged that grandparents play a significant role, according to research from the Children's Mutual.
The group recorded that 85 per cent of grandparents would be willing to invest, adding that if both sets of grandparents invested £20 per month for their grandchild, he or she would be £14,400 better off in the future.
When CTF Week was launched on January 15th, the Building Societies Association (BSA) updated its information leaflet aimed at answering the main questions asked by parents regarding the accounts.
The event was launched by economic secretary Ed Balls, who claimed that the CTF scheme had achieved greater success than expected, with three in four parents actively opening the account.
However, F&C Investments commented that the success of the CTF scheme should be measured by the amount of top-ups made by families with the financial means to do so, rather than focusing on the number of vouchers invested.
Meanwhile, Family Investments stated that lower income groups need to be targeted by the scheme, as it said 25 per cent of families who do not choose their own fund showed correlation with those on lower incomes.
When given the option between a stakeholder or a cash option, parents tended to opt for the cash accounts, with the BSA reporting that a total of £19.5 million in net receipts was invested into cash CTFs from October to December.
Following the end of CTF Week, the Pep and Isa Management Association (Pima) called on parents to think of the accounts in the long-term, as regular top-ups could make a "significant difference" to the funds.
In the meantime, continuing discussions regarding inheritance tax (IHT) led to reports during the month that many Britons are considering giving money away to family and friends to avoid paying IHT.
Research from Scottish Widows revealed that 41 per cent of households in the UK are eligible for IHT, with 43 per cent of these people taking measures to reduce the bill.
