Child Trust Funds - what parents really think.
Research always tells us that Child Trust Funds are popular with parents and that take-up of the scheme is strong. The Conservatives say they will scrap the scheme if they win the election saying they are only necessary for the worst off families. So does the investment scheme work? Myfinances.co.uk's Kate Saines sought the views of a group of parents.
If you are the parent of a young child aged seven or younger it is highly likely you will know a thing or two about the Child Trust Fund (CTF) scheme.
You may have already invested the £250 voucher the government donated to your child when he or she was born.
And you, your family and friends may be making regular contributions, up to the maximum £1,200 allowed each year, to help your son or daughter get a financial kick-start when they are 18.
Alternatively, you may be one of many hanging on to the voucher, still trying to understand what you are supposed to do with it and where to invest the money.
Or you might simply have forgotten all about it.
Whatever category you fall into you will almost certainly not be alone because there appears to have been a very mixed response to the scheme from parents.
In fact, it's hard to really get to the bottom of whether the CTF scheme has been a roaring success or a damp squib.
On the one hand, we have research telling us that inflows into CTFs have been plentiful since the government launched the scheme back in September 2002.
The most recent HM Treasury statistics show the average contribution being made to CTFs by parents, friends and family per year was £289. Apparently, three quarters of parents opened accounts within their child's first year and £2 billion was being held in trust funds overall.
But other analysis suggests this kind of uptake is not necessarily good.
Last week financial advice website Unbiased.co.uk told us few parents were topping up their account after investing the initial £250 voucher.
What is more, they were not taking advantage of tax breaks. And while three quarters of eligible children might have a fund, there were still 25 % whose money lay dormant.
To add further confusion to parents of children yet to embark on their CTF investment plan, it might not even exist in a few months' time.
This is because the Conservatives have announced, if they were to gain power at the election, they would scrap the scheme for families with incomes of more than £16,040.
Their research shows CTFs are failing to help the more deprived families in the UK because people in poorer areas are less likely to invest in one.
Naturally, the CTF providers themselves do not agree. One firm, Family Investments, thinks pulling the £250 voucher will disadvantage other sections of society.
John Reeve, chief executive of Family Investments, says: "It is hard-working, low and middle income families who will really be hit by these spending cuts.
"These are exactly the kind of families who may want to save for their children's future but need the help and encouragement to do so."
He adds that to get rid of the CTF before the long-term benefits have been realised would seem "very strange".
For families who have already invested the £250 for their first child, but may not receive this for the second, there is the challenge - to ensure each child is treated fairly - of finding the cash themselves for any future offspring.
We know what the government and the industry have to say on the matter, what do parents out there really think about the scheme? Myfinances.co.uk decided to ask a group of parents of children eligible for the voucher for their views on the scheme and of the Conservative Party's plans to get rid of it.
While Family Investments research suggests 96% of parents thought the scheme was a "good thing" and 80% thought all newborns should still remain eligible for the scheme, our research was a little different.
We encountered a much more ambivalent attitude towards the scheme. Of all parents interviewed not one had taken full advantage of their CTF.
They had either not invested their £250 voucher, or if they had few had not topped up the account since it was first opened.
What is more, there was a worrying level of confusion and misunderstanding around the scheme.
John Charles, a 30-year-old civil servant, told us he had not yet invested the voucher for his five-month old son because he was finding it difficult to get his head around how to invest the cash.
"There are so many accounts to choose from," he says, "and I am still trying to find the best one. But, to be honest, I don't really understand it, despite having read all the information."
He was not alone. Two other parents said they felt they were confronted with such a minefield when they started looking into how and where to invest the voucher, they gave up searching.
With enough to do when you are adapting to parenthood it would seem learning about investment is not high on many parents' list of priorities.
Liz Geary, 31, a student midwife and mother-of-two, was enthusiastic about the scheme to begin with, researching her options and eventually choosing a fund she liked with NatWest. She even made contributions when her five and three-year-olds were very young.
The problem is the recession and other commitments have meant topping up the accounts has become a luxury that she and her husband simply cannot afford.
We also heard from one mum who, as her daughter has just turned two, said she just hasn't got round to topping up the CTF yet.
When it comes to scrapping the scheme, almost everyone we spoke to was in agreement that the £250 voucher should be limited to families on low incomes.
Michelle Qureshi, mum to four-month-old Charlie, says: "Having the scheme is an incentive to open an account for your child and start saving for his future. But I think the scheme should exist for disadvantaged families where the money would make a difference."
Meanwhile, Louisa Jonas, a secretary and mum to two children aged four and five, said the scheme should be scrapped for everyone.
"It's disgusting that money is being taken out of the coffers for savings, why can't people earn their children's savings?
"Too many things that are a luxury are being re-labelled as necessities. Your child does not need savings, and if you can't afford it you should lump it."
The CTF was not without its supporters among our interviewees. Ms Geary said it was an important scheme to help create a savings culture among our future generations.
"It is a good idea, even if people only invest the £250. It is better than nothing and at least might contribute towards something when the child is older."
Two of the parents we spoke to admitted they didn't top up their child's CTF because they had opened a separate savings account for them, but still did not want to see an end to the scheme.
So while CTFs were met with a mixed reaction from the parents we spoke to, one message came out very clear.
While the statistics might look good, there appear to be many parents who are not making the most of the CTFs. And that's not through a lack of trying. They are simply confused or lacking in the investment knowledge to confidently make a big financial decision on their child's behalf.
Whether the answer is in education, scrapping the scheme or making it easier to invest, it is still up the parent to take responsibility at the moment. So if your child is eligible now it's probably better to invest the money anywhere - even in the CTF at your own high street bank -to ensure your child will get, at the very least, their £250 back when they are 18.
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