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Last Updated: Wednesday, 23 March, 2005, 11:17 GMT
Parents 'confused' by baby bonus
Baby standing up in a cot
Children born from September 2002 qualify
Nearly a fifth of parents with children who will not qualify for a Child Trust Fund still expect to get a voucher, a study by an investment body has said.

It found awareness of the plans had grown since last year, but many parents were still confused about eligibility.

Children born on or after 1 September 2002 will receive 250 each, rising to 500 for low-income families.

The money must be invested in a Child Trust Fund and cannot be accessed until the child is 18 years old.

The survey by the Association of Investment Trust Companies (AITC) found that 76% of people are now aware of Child Trust Funds compared with 38% in June last year.

However, 17% of parents of children who are not eligible for the funds think they will also be receiving vouchers.

Shares shunned

About two million children born on or after 1 September 2002 qualify for the savings scheme, which starts in April.

Most eligible parents should have received information and vouchers already.

What the Child Trust Fund could be worth*
500 with 5% annual growth would become 1,000 in 18 years
500 with 7% annual growth would become 1,410 in 18 years
500 with 9% annual growth would become 1,970 in 18 years
*Includes a management charge Source: Virgin Money

The AITC said most parents were planning to put the money in a bank or building society account, despite experts generally recommending shares for long-term investments.

Fewer than one in ten parents said they were going to invest in the stock market.

Among those who said no to share-based investments, almost half viewed the stock market as too risky. A similar amount said they did not understand share-based investments.

More than eight in 10 parents plan on topping up the accounts, AITC said, suggesting many were supporting the government scheme.

"The flexibility of the Child Trust Fund means that parents will be able to switch between providers, but we need more financial education to help them make informed choices," said Annabel Brodie-Smith of the AITC.


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