Around a quarter of parents have not invested the £250 Child Trust Fund (CTF) vouchers given to them, meaning that parents are needlessly adding to their child’s future debt worries.
“It seems you just can’t give money away,” commented Jason Holland, head of communications at F&C Asset Management. “This cash could have been working away at generating tax free returns for kids to help fund the likes of future college fees.”
If the government vouchers are not invested within 12 months of being issued, the government acts on the child’s behalf and invests them into a tax-free account anyway.
However, this comes at the loss of 12 months of interest, parental choice of account and good practice for savings and debt management by the parents.
Mr Holland added that the total amount left without being invested was £87 million, meaning that there is a huge amount of interest to off-set future debt being lost.