Saving for your children is something that remains as important as ever for many parents, but in the current economic situation in can prove difficult to know what the best options are.
With cuts to welfare and child trust funds (CTFs) there is a risk of some parents missing out a better deal for their offspring.
Expert opinions
The Association of Financial Mutuals (AFM) has warned this could potentially set children’s savings back years.
Martin Shaw, chief executive of the AFM, told the Financial Times government measures such as removing CTFs and cutting back on social welfare may cause some families to call a halt to saving for their children’s future.
Mr Shaw said: “Over the past few years, there has been a massive surge in parents saving for children, and this is directly as a result of the CTF and the commitment of mutuals to developing a successful market.
He added there is a real risk people will cease to invest in their children’s future and added “this will result in further concentration of assets in the UK to the most wealthy minority”.
Meanwhile, David White, chief executive of The Children’s Mutual, was keen to stress the value of putting cash aside.
He said: “The CTF ensured that every newborn child in the UK had a savings account opened that they could access at the age of 18. With ever-increasing demands on family savings and reports that university students face debts of £25,000 on graduation, it is critical that we explore ways to protect savings for our children.”
However, the question a number of parents may be asking is what option will provide them with the best value?
Kevin Tooze, managing director of Essex-based Equity Partners UK, advises one option is putting funds in an equity-based Isa, rather than a cash-based one.
An option worth considering
Why not take steps now that could ensure your family are set up for future life?
The government announced on May 24th this year that it intended to reduce and then stop government payments to Child Trust Fund accounts.
Until August 1st 2010 parents received a £250 voucher from the government to start a Child Trust Fund account for their offspring and if the child was from a lower income family the government then paid an additional £250 into the account.
However, at present the voucher and additional payment will, for children born between August and December this year, each have a value of £50 or £100 for low-income families.
Children born from January 2011 onwards will not qualify for a Child Trust Fund account.
But it is still possible to open Child Trust Funds, albeit without the level of support previously given by the government. This could prove to be an easy way to manage save the pennies.
Family Investments is a mutual organisation with over 30 years’ experience in providing investments for families.
Such is their experience, they currently look after around £2.2 billion of family money for over 1.5 million people in the UK and are experienced in providing family savings and investment plans.
The firm was also chosen to provide the Child Trust Funds for high street names such as Santander, the Post Office and Barclays and nine out of ten of its customers surveyed say they would recommend the company to a friend.
Family Investments has a range of children’s savings products, including for people whose baby has a due date on or after January 2011 who might find themselves affected by the recent changes.
To find out more information on Child Trust Funds from Family Investments or to apply online click here.
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