The Children’s Mutual has praised the impact Child Trust Funds have had since their launch in 2002.

Following David Cameron’s speech earlier this week, which highlighted that social mobility remains a key challenge in the development of the UK, The Children’s Mutual is now urging young families to open a Child Trust Fund (CTF) if they haven’t already done so.

A CTF is available to children born on or after 1 September 2002 and in receipt of child benefit with relatives and friends all able to make contributions.

In the past seven years since the Government introduced the CTF scheme, over 4.6 million children now have an account, with almost £2billion already being saved for their futures.

Research by The Children’s Mutual has shown that 74 per cent of families with eligible children have proactively opened an account, while 30 per cent of lower income families pay monthly into their child’s CTF.

Commenting on the Conservative leader’s speech, David White, chief executive of The Children’s Mutual, said: “Eradicating poverty and giving all children the best we can is an important goal and we welcome the Conservatives focus on achieving this.

“Whilst there is still progress to be made we want to highlight the efforts made by many families to save for their children’s futures over the past five years since the launch of the CTF.”

According The Children’s Mutual, families in the lowest income bracket save a higher proportion of their household income for their children than those in more affluent groupings, which Mr White says is reason the CTF was launched.

“The CTF was conceived to level the playing field and give all children a tangible financial asset when they turn 18. In 2020 the first children of the CTF generation will begin their adult lives with money to put towards fulfilling their goals and achieving their ambitions,” he said.

However, Andrew Hagger, spokesman for Moneynet.co.uk, although welcoming the fact that CTF’s have encouraged families to save more, believes providers need to improve interest rates on their children’s savings accounts to entice more people to save.

“We keep hearing how important it is to have some savings behind you, but when you look at the rates of interest on offer for children’s accounts, you can see why some parents just don’t bother.

“If we want our children to grow up with some savings behind them and to appreciate the value of money rather than reach for the plastic, providers need to offer better rates and incentives to encourage parents and their youngsters to save regularly,” he said.

© Fair Investment Company Ltd