Child Trust Funds, graduates, school leavers and the gap years
“Most people know that the British Government provides tax incentives for people to save for their old age, whether in individual savings accounts (ISAs) or pensions, but not nearly enough people yet fully appreciate the potential benefits of the long term savings plan that exists for children”, says Tony Vine-Lott, Director General of the Tax Incentivised Savings Association.
He continued:
“And with the inaugural My Money Week (starting on 29 June) helping primary schools to bring money management to life for children, now is an ideal time for parents to start maximising the potential of their childrens’ Child Trust Funds (CTFs).
“Furthermore CTFs receive a welcome top-up from the government this September with the introduction of a second contribution when a child reaches age 7. But it’s important to remember that one of the key attractions of CTFs is that they are for grandchildren, godchildren, nieces and nephews, family friends too! Adults can contribute to each child’s total allowance of £1,200 per annum in addition to any government contribution.
“We know that an ability to commit to long term savings for ourselves will directly enhance our future quality of life in retirement. Similarly, well supported Child Trust Funds are likely to have a marked influence on the quality of choice available to pupils leaving school, students going on to explore new horizons and young people looking to start their new careers.
”In eleven years, the first wave of Child Trust Fund beneficiaries will be coming through. Following a recent report*, the class of 2009 might well reflect that such a financial boost would help a lot!”
The report* suggests that the class of 2009 will be facing a difficult summer. 50% of the employers surveyed will not be looking to recruit school leavers or graduates at the end of term. At the same time, the latest official unemployment figures show that one in six 18-25 year olds are now looking for work.
Professor David Blanchflower, until recently a member of the Bank of England’s monetary policy committee, is but one voice warning that one of society’s most pressing problems is the prospect of rising youth unemployment.
* Report issued by the Chartered Institute of Personnel and Development – May 2009
For further information, please contact:
Tony Vine Lott, TISA – Mobile: 07790 006 108
Email: tony.vine-lott@tisa.uk.com
Issued on behalf of TISA by Cauldron Consulting, contact Steve Radford – Tel: 020 3178 7238, Mobile: 07889 903786. Email: steve.radford@cauldron-consulting.com
Or visit: TISA’s website: www.tisa.uk.com
Notes for Editors
1. Every eligible child could benefit from tax free saving of £1200 per year to build into a nest egg for them when they reach 18 years of age.
2. Further details about My Money Week are available at www.mymoneyonline.org
3. The new tax year has seen the introduction of ‘voucherless CTF opening’ which allows parents to complete the application process online using their child’s unique CTF number. Previously, parents could fill in the application online but the account could not be opened until the provider received the voucher in the post. This now means that parents can manage their child’s fund using the internet.
4. The Government will also commence the second payment to CTF holders on their 7th birthday this year.
5. If parents have questions or concerns, they should call or contact their CTF provider or contact the Government’s information helpline on 0845 302 1470 or by visiting http://www.childtrustfund.gov.uk/.
6. Unfortunately some errors inadvertently found their way into the CTF statistical information provided by members as reported in TISA’s April news release. We apologise for this, the correct figures are available on the TISA website:
a. Average monthly rate of subscription was overstated by £2.95 and should have read £22.23
b. The total value of regular monthly subscriptions was overstated by £1.733million and should have read £13.086 million.
The Tax Incentivised Savings Association (TISA)
TISA is the premier trade association in the UK retail savings and investment industry. By engaging with member firms, government, political parties, regulators and consumer groups TISA’s ultimate goal is always to further consumers’ best interests. It seeks to improve the range, features and quality of savings and investment schemes available whilst at the same time encouraging more people to save for their financial security and peace of mind.
Uniquely, TISA is able to articulate the opinions of the whole savings and investments marketplace through its membership comprising over 120 member firms involved in the supply or distribution of products to the sector and its consumer interest. TISA’s remit extends across the broad spectrum of government sponsored savings and investment vehicles including:
• Individual Savings Accounts (ISAs)
• Child Trust Funds (CTFs)
• Savings Gateway
• Personal Pensions
• Investment Bonds
• Employer based pension schemes
• Wraps and platforms
• Other consumer-centric savings schemes and initiatives.
HM Government uses TISA’s market knowledge and ability to represent the views of both the savings and investments industry and consumers to help it to its policy in this area. Recent TISA successes include improvements to the ISA, the regime in which ISAs operate and simplification of the CTF.
TISA’s primary activities include:
• Advising political parties, HM Treasury, HM Revenue & Customs ,Financial Services Authority and Pensions Regulator on improvements to the various tax incentivised savings and investment vehicles
• Facilitating networking across the industry through TISA events including the Annual Conference, Advisory Groups, Discussion Forums and Executive Lunches
• Providing technical advice and assistance on scheme regulations
• Delivering training via seminars on topical issues as well as various courses on ISA and CTF administration.