The Children’s Mutual, one of the leading UK providers of Child Trust Funds (CTFs), has closed 3 of its children’s savings products to new customers, pending a strategy review.
The news comes following the government’s decision to scrap the Child Trust Fund scheme, the keystone of the children’s savings business for Children’s Mutual, earlier in the year.
The Children’s Mutual has said that, on a temporary basis at least, it will accept no new children’s savings business for its With-Profits CTF, its Growing Up Bond, and its Non-Stakeholder CTF. The company’s stakeholder CTF is unaffected.
The company has said this will not affect existing customers saving for children through these products, which have been temporarily suspended while the company finalises its future strategy with regard to its children’s investments products.
Existing Child Trust Fund accounts will continue to run until all children have reached their 18th birthday, and annual children’s savings of up to £1,200 in the accounts can proceed as usual.
Under the Child Trust Fund scheme, government had been giving all children a £250 voucher to open a CTF account, with a second £250 payment due on their 7th birthday. The Child Trust Fund scheme will now be phased out, with vouchers valued at just £50 being provided to children born after 1 August this year, and no new children’s savings vouchers at all issued after 1 January 2011.
In reference to the closure of the Child Trust Fund scheme, Children’s Mutual chief executive David White said: We’re now going to have a black hole for children’s savings, we don’t know what children’s savings are going to look like.”
