Pension savings could be an alternative to Child Trust Funds according to NFU Mutual.

Child Trust Funds are due to be scrapped by the new Government in January after they were deemed too costly and unnecessary.

At the moment newborns receive £250, or £500 if they are from low income families, and these payments are then doubled at the age of 7.

But the decision to end the CTF scheme means that parents will be looking for an alternative way to save for their children’s future.

With pensions even more in focus now following the news that the retirement age and stat pension age are set to rise, NFU Mutual has suggested that parents consider investing into a pension fund for their children instead.

Shelagh Hamer, pension specialist at NFU Mutual said: “Investing via a pension allows you to build up a significant investment pot during your child’s lifetime. This means they can divert their funds elsewhere i.e. buying a car, or paying for a wedding, without worrying about immediately starting a pension.

“Plus, long-term investors, like those contributing to a pension, traditionally have a much better chance of riding out market volatility and capitalising on the periods when the stock market is rising.

“CTFs are a great tax-free way to encourage parents to save for their child’s future, but many forget they can also set up a Children’s Stakeholder Pension to help save towards their retirement.”

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