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Spend & Save

Complexity of scheme holds parents back from opening accounts

More than a quarter of parents are failing to invest their child trust fund (CTF) vouchers, government figures show. The vouchers, which are designed to give children a head start in life, are meant to be invested by their parents in an approved account, but many are choosing instead to let the government invest the money for them when the vouchers expire. Lower socio-economic households are even less likely to set up a CTF for their children and thus are less likely to make additional contributions into their children's CTFs once they have been set up.

Kevin Barker at Family Investments says that the high number of parents failing to invest their CTF vouchers or make additional contributions is due to the complexity of the scheme: "We believe that take-up should be at a much higher level and this can only be achieved through a simplification of the entire scheme. The fundamental problem is that the scheme is too complex to educate the less financially engaged, or to motivate the apathetic."

Family Investments called on the Government to reduce the choice available to parents as this creates confusion and to incentivise parents into opening a CTF early rather than waiting a year until the Government opens one on their behalf.