Those worried that the Junior ISA will fail to attract potential savers now the government has removed their contributions need look no further than the Child Trust Fund contribution figures for the last quarter of 2010.
The Child Trust Fund has been available since 2002 and all savers were given a £250 voucher by the government to help them along the way. The Junior ISA will replace the CTF, taken away at the end of last year, and will launch in the Autumn.
Some critics had suggested that savers may not make the most of the products tax free benefits because there was no incentive to save, as the Child Trust Fund had previously.
The last quarter of 2010 saw now government contributions to existing Child Trust Funds continue to rise, suggesting there will be a market for the products when they launch.
In the period leading up to December 15, the average subscription increased to £525 up from £516 in the previous quarter.
Tax Incentivised Savings Association’s (TISA) Director General, Tony Vine-Lott, said the news “bodes well for the new children’s savings initiative” and showed there was still a “strong desire by parents to ensure that their children have a financial asset at 18.”