Education hopes for child funds

Parents want their children to spend their fund money on education

Six out of 10 parents want their children to use the cash from a matured Child Trust Fund (CTF) to pay towards a university course, a survey has said.

The survey, of people who had opened CTFs with Halifax Financial Services, also found 60% of parents planned to make extra contributions to the funds.

Child Trust Funds were introduced by the government in April this year.

Under the scheme, every child born in the UK on or after 1 September 2002 will get at least £250 for their fund.

Families on low incomes should receive an additional £250.

The money in the CTF cannot be accessed until the child reaches 18. However, at the age of 16, the child will take over the responsibility for managing the account themselves.

Top ups

The research from Halifax Financial Services found 61% of parents wanted their children to use the money to help fund their way through university.

Most parents probably still have opening a Child Trust Fund on their 'to do' list, but we're urging them to act now Ray Milne, Halifax Financial Services Read more about Child Trust Funds

The survey also said 28% of parents hoped the cash could be used to buy a car, while 19% hoped the money could be put towards a deposit for a flat or house.

It also found 60% of parents were planning to make additional contributions to their funds. Earlier this week, F&C Asset Management said that 67% of people who had opened funds with them had put in extra cash.

Under CTF rules, each fund can be topped up by families or friends, up to a maximum limit of £1,200 a year.

Only 8% of parents expect to put in the full £1,200, Halifax Financial Services said, while 42% say they will add between £100 and £250.

Maximising benefits

Figures from HM Revenue and Customs recently showed that nearly half a million CTFs had been opened, although the government has sent out a total of 1.7 million CTF vouchers to parents.

A study for the Abbey bank earlier this week said that of those who had not invested their CTF voucher, nearly two-thirds said they "just hadn't got round to it yet".

Nearly one-quarter said they had not invested the money because they did not know which supplier to choose, Abbey said.

Halifax Financial Services warned that those who had not invested the vouchers risked their funds missing out on valuable growth.

"Most parents probably still have opening a Child Trust Fund on their 'to do' list, but we're urging them to act now and ensure their children benefit from their investment," said Ray Milne, managing director of Halifax Financial Services.