Home
>
Personal Finance
>
UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

The British government at the beginning of this year officially launched its Child Trust Fund (CTF) initiative in an effort to encourage parents and children to develop the savings habit and to teach children the value of saving their own money.

Chancellor, Gordon Brown said, "The Child Trust Fund is designed to ensure that every child in our country has assets and wealth and that no child is left out and all children in Britain have a stake in the wealth of the nation".

The basis of the CTF scheme is that every child born in the UK on or after 1 September 2002, will receive an initial Government payment of ?250-?500 (depending on family income), which must be placed into a tax-free CTF savings account which cannot be accessed for withdrawals until the child reaches 18 years of age. Additional contributions to the account can be made by the child's family or friends, and the government also plans to make another payment to children on their seventh birthday. Parents that do not invest the government's gift within a year will have it invested for them by the Inland Revenue.

This 'free money' for children idea seems on the face of it to be a great idea for parents. A recent survey by the Halifax has shown that, of those parents who have already opened a CTF account, six out of 10 planned to make further contributions, and wanted their children to use the cash from a matured CTF to pay towards a university course. The survey also showed that 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.

Although some families have taken to the idea by quickly investing the funds to maximise the cash return for their child when they reach 18, with figures from HM Revenue and Customs recently showing that nearly half a million CTFs had been opened, others have been more reticent, with approximately 1.2 million CTF vouchers sent out to parents still not invested.

A study by Abbey found that of those who had so far not invested their CTF voucher, nearly two-thirds stated that they, "just hadn't got round to it yet", while about one-quarter had not invested the money because they did not know which supplier to choose.

Another problem that has been recently highlighted is the lack of provision that has been made for Islamic children, as none of the existing CTF accounts complied with Sharia law. Under Sharia law, it is forbidden to give or receive interest or to invest in unethical firms. This meant that, in order to use the voucher, parents of the 120,000 eligible Muslim babies could only choose non-Sharia compliant accounts. Thankfully, in a move welcomed by the government, the first Sharia compliant CTF has just been launched by Children's Mutual, allowing a growing community of people who were previously reluctant to invest their CTF, the opportunity to benefit from CTFs.

The take-up of the CTF has proved to be extremely disappointing for the Government, with those who have not so far invested their voucher being at risk missing out on valuable growth to their fund. Ray Milne, managing director of Halifax Financial Services, said that "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".

Whilst many view the whole idea of the CTFs as a waste of tax-payers money given the ensuing pensions problem that is looming, others see that any benefit to future university students would be overshadowed by the rising cost of university tuition fees.

"For those who choose to go to university it is a particularly hollow gesture as the government will give them a few hundred pounds in cash and at the same time a mortgage-style bill in tuition fees," stated Phil Willis, the Liberal Democrat education spokesman.

Whatever your opinion of the scheme itself, it seems that even the majority of those whose children will benefit from the fund are either not interested or feel they do not have enough knowledge to choose a provider. While the government can produce expensive adverts to raise pubic awareness and companies can provide information on the accounts that are available, the public's fear and apathy regarding all things related to personal finance may prove a more difficult hurdle to overcome, and this may be a problem that not only affect us, but will also lead to many of our children paying the penalty in later life.

Further information:

shariah compliant ctf

Richard works in Edinburgh for a media company, occasionally writing for the personal finance blog Cashzilla, and drinking too much coffee.

Brookfield limo Midway .. Lockport Chicago limo O’Hare

In The News:

A startup claims to have developed the world's first entirely artificial intelligence-designed and 3D-printed shoe, the brainchild of a 25-year-old.

Creating an email alias can help clean up your inbox by organizing emails based on purpose, like creating different aliases for shopping, newsletters and work.

A multipurpose robotic system promises to transform how items are stacked onto pallets, aiming to maximize space utilization and reduce shipping costs.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

The number of people affected by a UnitedHealth data breach in February 2024 was actually higher than previously reported and was the largest medical data breach in U.S. history.

A phishing campaign uses Google Calendar to schedule fake meeting invitations that appear legitimate, redirecting targets to phishing sites.

Toll road text scam: Fake messages claim unpaid fees, seek payment via fraudulent links. Kurt “CyberGuy" Knutsson says this scam is becoming increasingly sophisticated and widespread.

Kurt “CyberGuy" Knutsson says these steps ensure that your friends and family get to the exact moment you want them to see. Try it out and streamline your sharing experience.

Tech expert Kurt “CyberGuy" Knutsson offers tips on how to protect your identity: Be vigilant, monitor accounts, use smart security, know theft response.

Tech expert Kurt “CyberGuy" Knutsson says cybercriminals are exploiting iMessage phishing protection, tricking users to reactivate links.

It's hard to imagine life without in-flight Wi-Fi these days – but sky-high web surfing comes with its own set of privacy concerns. Here's how to protect yourself.

Over 400,000 cases of credit card fraud were reported in 2024 to the Federal Trade Commission. The CyberGuy explains how to protect against becoming another victim.

A nondescript metal box transforms into a fully functional electric motorcycle that blurs the line between vehicle and urban infrastructure.

Many apps unrelated to location still ask users for tracking permission, and Texas Attorney General Ken Paxton has filed a lawsuit seeking to end this alleged practice by Allstate.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Melody, the artificial intelligence-powered robot, is life-sized and represents a move toward creating robots that resemble people in appearance and interaction.

Here are five easy smartphone rules from the National Security Agency that you can follow to better protect your mobile device from hackers and scammers.

A U.S. robotics company has developed "Jennie," a robotic pet powered by artificial intelligence that's designed to comfort those facing mental health challenges.

Healthcare records for more than 184 million Americans were breached in 2024, but you can take steps to minimize that risk. Kurt the CyberGuy explains.

The Skyrider X1 from Rictor claims to be the "first amphibious flying passenger motorcycle," and it combines land and air travel in one sleek design.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Home inventory and restoration apps help itemize and track every item in your home in the event you have to make an insurance claim after a natural disaster.

The White House launched a new cybersecurity safety label, the U.S. Cyber Trust Mark, intended to help consumers make informed decisions on smart device safety.

Today's tech can help make life so much easier — if you know how to use it. Here are a few tips on the quickest and best ways to make your phone, laptop and other devices work for you.

Tech expert Kurt “CyberGuy" Knutsson offers Windows 11 restart fixes: Update drivers, run system scans and check hardware.

UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

Personal Finance