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In the week in which the first vouchers for Child Trust Funds are to be issued, a new survey for the Asssociation of British Insurers (ABI)  reveals that over four in ten parents (42%) are most likely to invest their child’s CTF in a deposit-based account, as opposed to alternatives which may be more appropriate for long-term investments, such as a stakeholder account (20%), or accounts that invest in the stock market (9%).

The ABI survey also indicates that the deposit-based account option is particularly popular among women, younger parents, in Scotland and among lower income groups. 

Joanne Segars said: 

“Child Trust Funds are an important opportunity to develop the savings habit for the next generation.  But it is important that the payment provided by the Government to children born after September 2002 does not act as a disincentive to save for parents who also have a child born before that date.  We want the Government to monitor and review this cut-off date, to ensure that the Child Trust Fund is equitable to all children”.

- ENDS –

Key findings

· The survey was commissioned by the ABI and carried out by YouGov in January 2005, among a sample size of 338 parents in the UK.
· Over four in ten parents (41%) say they will invest in a deposit-based account.  This option is particularly popular among women, younger parents, in Scotland and among lower social groups. The second most popular option is a stakeholder account (20%).  A non-stakeholder 100% equity account is the least popular (9%).
· A relatively high proportion of parents (60%) say they will save between £5 and £100 a month in their children’s CTFs and 38% of these say they are likely to save more over time
· 19% of parents ticked the option that they would not save more because they have an older child and so it could prove unfair
· Parents want their children to use the fund for ‘worthwhile’ things, such as higher education or training (41%), a deposit for a house (17%) and rolling over into another savings product (12%).  Only 2% think it should be used to set up a business
 

Notes

Notes for Editors

1. Enquiries to:
Leonie Edwards 020 7216 7394 (Mobile: 07736 664343)
Lucy Butler  020 7216 7411 (Mobile: 07712 841184)
 Alan Leaman  020 7216 7440 (Mobile: 07957 482330)
  Malcolm Tarling  020 7216 7410 (Mobile: 07776 147667)
 

2. The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

3. An ISDN line is available for broadcasts. 

Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk

06/05