Child trust fund generation turns 6

Monday sees the sixth birthday of the first children given child trust funds by the government.

Now over 3.5 million children have child trust fund accounts, based on the initial investment from the government of £250 plus any additions from parents, family or friends to the tune of a maximum of £1,200 each year.

Next year the first children of the child trust fund generation will also receive a further £250 from the government – paid on their seventh birthday – and those from low income family will get £500.

Child trust fund provider The Children's Mutual urges parents to maximise the investment in their offspring's future by adding to accounts regularly.

Customers with The Children's Mutual pay an average of £24 a month into their children's child trust funds – which if maintained could give a child a lump sum of up to £9,750 when they reach age 18.

Those investing the maximum £1,000 a month will see children with £37,100.

David White, chief executive of The Children's Mutual, explained paying into a child trust fund is not just the altruists' decision.

"Parents should be celebrating that by paying into a child trust fund they are going to be making a real difference to their child's future and also their own - by making the decision to prepare for future financial burdens early, parents can help to limit any potential impact on their own pocket at a time when they might be contemplating retirement or becoming mortgage free."

He added: "Today's six year olds and their younger counterparts are benefiting from a national savings and investment scheme that we hope will continue to revolutionise the savings culture in the UK."