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The Future of the Child Trust Fund marketProduct Type: Market Research ReportPublished by: Datamonitor Published: March 2004 Product Code: R313-6611 Description IntroductionIn May 2005 the UK government will introduce its new Child Trust Funds, giving every child in the UK a savings fund which will grow tax free until their eighteenth birthday. Attitudes to the new scheme amongst both competitors and consumers are mixed. This report suggests the shape the market will take and the strategies that can allow competitors to size the opportunities offered by the fund. Scope Based on interviews with many of the players and regulators most likely to play formative roles in the Child Trust Fund market. Delivers specific action points for success in this market. Reasons to Purchase Discover the strategies and approaches of a wide variety of competitors in the Child Trust Fund market; Understand the likely shape of the market. Action points highlight winning strategies in this new market. Report Highlights The experience of stakeholder pensions has made competitors extremely cautious in their approach to this new market. Thus there will be less entrants, some big names may ignore the market or simply outsource their offerings. However there are unlikely to be withdrawals because this process was embarrassing and expensive over stakeholder pensions. About 30% of customers have incomes below GBP13,240 and are unlikely to save additional funds. Industry opinion suggests that in reality about 20-30% of the market will make regular small payments into the CTF. The proportion that uses their full allowance, or uses the fund as part of a broader financial plan for their child, will be much smaller. In order to get parents to make additional contributions to the CTFs, it is crucial that competitors actively target parents-to-be and new parents with the aim gaining their CTF voucher and setting up regular contributions. Successfully doing this will radically add to the value of this market for competitors. Table of Contents TABLE OF CONTENTSABOUT DATAMONITOR 2 THE FUTURE OF THE CHILD TRUST FUND MARKET 5 International comparisons 5 The current children’s savings market 8 National Savings and Investments 8 Friendly societies 8 Mutual funds 9 Customers 9 Current customer attitudes to CTF are mixed 9 Customers in the childrens savings market can be segmented into four groups 11 The impact of CTFs on children’s savings levels 11 Segmenting potential savings patterns 12 Patterns of savings into CTFs 12 Market 13 Competitors 15 Banks, building societies 15 Friendly societies 16 National Savings & Investments 18 IFAs 18 Private banks 19 Products 20 Impact of product features 20 Pricing 20 Product and investment variety 21 Action points 23 APPENDIX 25 Definitions 25 Research methodology 26 Further Reading 26 Datamonitor Global Wealth Service SPP: Reports 26 Datamonitor Global Wealth Service SPP: Insight Reports 26 Datamonitor Global Wealth Service SPP: Competitor Tracking 27 Related Datamonitor Savings & Investments SPP Reports 27 Datamonitor’s Global Wealth Model 28 Datamonitor Financial Services Consulting 29 SPP writing team 29 |
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