Child trust funds set to deliver £9,750

The average child trust fund will deliver £9,750 when it matures, at the current rate of savings.

Despite rising prices putting pressures on families' budgets the average direct debit payment into a child trust fund is £24 a month, according to new data from the HM Revenues & Customs (HMRC).

Since child trust funds were launched, some 2.5 million accounts have been opened – representing 74 per cent of all vouchers issued by the government to parents.

David White, chief executive of The Children’s Mutual, welcomed the rise in saving.

"The latest figures from the HMRC make encouraging reading. Considering the economic backdrop, it is very reassuring that the number of child trust fund vouchers being placed by parents has remained strong with nearly three quarters of vouchers placed within a year of issue," he said.

"Prior to the introduction of the child trust funds less than one in five families was saving regularly for their children. This has now leapt dramatically to almost six in ten, with regular payments being seen from every socio-economic background."

Research by the Children's Mutual also shows how grandparents are boosting child trust funds.

The average one-off contribution to a fund from grandparents is £348. If this is added each year it would mean a child on their 18th birthday would get £6,264 up to of other savings.

If £33 a month is paid into an account, a lump sum of £13,000 would be created.

Some 3.61 million children have benefited from child trust funds since they were made open to children born after September 1st 2002.

A maximum of £1,200 each year can be saved in the account by parents, family or friends once it has been opened, with several providers to choose from.

On the child's seventh birthday a further £250 is deposited by the government in the fund and an extra £250 for those from low-income households.

Parents also have the option of investing funds in ethical accounts, Sharia accounts, in shares or in stakeholder accounts.