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UK Children's Attitudes towards Saving Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Children's Attitudes towards Saving market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this Report

There are a number of types of children’s savings accounts, including easy-access accounts, regular savings accounts and fixed-term accounts or bonds. They tend to operate in the same way as savings accounts for adults, and are predominantly offered by banks and building societies. Some children’s savings accounts allow the child, if aged seven or above, to operate the account themselves, including the ability to deposit and withdraw money. Digital and online-only providers have been entering the market by offering parents solutions aimed at managing pocket money that can also act as budgeting and saving tools, enabled by strict spending limits and restrictions while also facilitating financial education.

Children’s savings accounts also include long-term tax-free savings accounts for children, usually with a variable rate of interest. Junior cash ISAs (Individual Savings Accounts) were launched in 2011 to replace cash CTFs (Child Trust Funds). The latter are no longer on sale but existing ones can have money deposited into them up to the same annual limit as Junior cash ISAs (£4,260 in 2018/19, although for CTFs it runs from the child’s birthday as opposed to the tax year). In both cases, the money legally belongs to the child, who can take control of their CTF or Junior ISA when they reach 16, but funds can only be withdrawn when they turn 18. Since 2015, a CTF can be transferred into a Junior ISA, but a child cannot hold both.

In addition to cash savings products, there are various long-term investment products for children including Junior stocks and shares ISAs. Unlike adult ISAs, a child can only hold one cash Junior ISA and one Junior stocks and shares ISA at any one time. However, it is possible to invest flexibly in both, up to the maximum allowance for the given tax year (distributed over both types of ISAs).

Friendly societies, sometimes in partnership with asset managers and specialised companies, are typically the main providers of Children’s Savings Plans. These are investment products which tend to be long term. Friendly societies’ legal status allows them to offer additional tax-efficient saving opportunities, not available to some other companies such as banks. The ease to open and manage products remotely has increased friendly societies’ reach, which is no longer limited to local communities, although some still may have preferential offers to existing members.

Also included are NS&I’s (National Savings & Investments) Children’s Bonds. This product is being phased out and from April 2018 is no longer on sale or available for renewal on maturity. Like other children’s bonds, it offered a fixed interest rate for a set term (five years) on amounts from £25-£3,000. However, unlike children’s bonds offered by banks and building societies, the NS&I account is exempt from tax for both the child and parent.

What you need to know

Parents naturally have their children’s best interests at heart, but saving and investing on their behalf can be challenging. Deciding when and how much to save, without compromising presentday spending and leaving room for urgent purchases, requires time and effort and can be hard, especially when combined with everyday finances and managing a young household.

A decade of low interest rates and consequent poor returns has negatively affected parents’ incentives to save. Similarly, providers have been less motivated to invest in development, awareness and promotion of their children’s savings products. However, with the end of government remedies to stimulate investment, and with the prospect of further interest rate rises in the horizon, the savings market should be set for growth in the coming years.

This Report reviews the market for children’s savings and investments, looking closely at the different products on offer and their recent performance. The Report analyses the drivers behind the market and the competitive strategies of major providers and challengers. Mintel’s original consumer research gets to the heart of who saves for children, how often they save and what products and types of providers are preferred. Furthermore, we have for the first time approached children themselves and asked them directly how they learn about money and engage with saving, including activities done on their own or with parents, and what they are interested in saving for.

Expert analysis from a specialist in the field

Written by Irene Salazar, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Despite parents’ commitment to save, a decade of low interest rates, regulatory interventions and limited developments in the market has reduced the appeal of child-specific products. The recent rate rise and digital innovations mean there are now plenty of opportunities for providers to shake things up and offer something different, both for parents and their children. Irene Salazar
Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Junior cash ISAs grow in volume but stocks and shares fall out of favour
              • Figure 1: Amounts subscribed to Junior ISAs and average subscription per account, 2012/13-2016/17
            • Households with two or more children still majority at 55%
              • Figure 2: Percentage of families with dependent children, by number of dependent children in the family, 1997, 2007 and 2017
            • The child population is projected to grow
              • Figure 3: Share of total population, by selected age group, 2018-33
            • First increase of interest rates in more than a decade while monetary policy schemes come to an end
              • Parents are less likely to describe their finances as healthy and less confident about financial prospects
                • British children spend an average of £25 a week by the time they reach 15
                  • Figure 4: Children’s average weekly spend, by age, 2014/15-2016/17
                • Companies and Brands
                  • Big brands have remained passive in a low-interest environment
                    • Prepaid cards provide a safe alternative to monitor and control spending
                      • Savings adspend more than doubles in 2017/18 while investment-related spend falls
                        • The consumer
                          • 83% of parents are saving for their children
                            • Figure 5: Proportion of parents who are saving for their children aged 10-15, by gender, March 2018
                          • Banks and building societies are the top choice, but piggybanks still appealing
                            • Figure 6: How parents save for their children, March 2018
                          • Parents still not persuaded to transfer CTFs into Junior ISAs
                            • Figure 7: Products held by parents saving for their children, March 2018
                          • Parents are confident in their actions but reactive about education
                            • Figure 8: Parents’ attitudes towards children’s savings, March 2018
                          • 63% of children say they save money themselves
                            • Figure 9: Who children say is saving money for them, March 2018
                          • Parents could be doing more money-related activities with their children
                            • Figure 10: Child and parent saving activities, March 2018
                          • Children need to be prompted to engage with savings
                            • Figure 11: Children’s saving activities, March 2018
                          • Two thirds of kids say they are in control of their money
                            • Figure 12: Children’s attitudes towards saving, March 2018
                          • What we think
                          • Issues and Insights

                            • The time is ripe for a turn in the tide
                              • The facts
                                • The implications
                                  • Parents are committed to saving but need support and want flexibility
                                    • The facts
                                      • The implications
                                        • Children’s attention needs to be captured, and early
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Junior cash ISAs grow in volume but stocks and shares fall out of favour
                                                • NS&I Children’s Bonds are being phased out
                                                  • Child population continues to grow
                                                    • First base rate rise in more than a decade
                                                      • Parents are less likely to describe their finances as healthy and less confident about financial prospects
                                                      • Children’s Savings Products

                                                        • Junior cash ISAs grow in volume but stocks and shares fall out of favour
                                                          • Figure 13: Number of Junior ISAs, amounts subscribed and average subscription, 2012/13-2016/17
                                                        • NS&I Children’s Bonds are being phased out
                                                          • Figure 14: NS&I transactions with investors in children’s bonds, 2016 and 2017*
                                                        • Initiative launched to uncover forgotten CTFs
                                                        • The Family Environment

                                                          • Composition of households remains stable, but total numbers continue to grow
                                                            • Figure 15: UK households and family types, 1997, 2007, 2012 and 2017
                                                          • Most family households have two or more children
                                                            • Figure 16: Percentage of families with dependent children, by number of dependent children in the family, 1997, 2007 and 2017
                                                          • The child population is projected to grow
                                                            • Figure 17: Projected size of UK child population, 2018, 2023, 2028 and 2033
                                                            • Figure 18: Share of total population, by selected age group, 2018-33
                                                        • Market Drivers

                                                          • The first rate rise in a decade
                                                            • Figure 19: Average monthly quoted cash deposit and ISA interest rates, January 2011-May 2018
                                                          • Funding for Lending and Term Funding Schemes draw to an end
                                                            • Parents are less likely to describe their finances as healthy…
                                                              • Figure 20: Current financial situation – parents versus non-parents, April 2018
                                                            • …and are less confident about their financial prospects
                                                              • Figure 21: Confidence in financial situation over the coming year, parents versus non-parents, April 2018
                                                            • British children spend an average of £25 a week by the time they reach 15
                                                              • Figure 22: Children’s average weekly spend, by age, 2014/15-2016/17
                                                          • Companies and Brands – What You Need to Know

                                                            • Big brands have remained passive in a low-interest environment
                                                              • Best rates tend to come with punishing conditions
                                                                • Prepaid as alternative to debit cards and cash meeting demand for pocket money solutions
                                                                  • Adspend on savings more than doubled in 2017/18
                                                                  • Competitive Strategies

                                                                    • Competition has suffered from the low-rate environment
                                                                      • Halifax launches best-in-town regular saver, but interest is downgraded after a year
                                                                        • Best rates tend to come with punishing conditions
                                                                          • Prepaid as alternative to debit cards and cash meeting demand for pocket money solutions
                                                                            • Digital solutions for pocket money
                                                                              • RoosterMoney
                                                                                • Figure 23: RoosterMoney app
                                                                              • Money Monster
                                                                                • Figure 24: Santander’s Money Monsters
                                                                              • Pigzbe
                                                                                • Figure 25: Pigzbe Kit
                                                                            • Case Study: Shepherds Friendly’s Young Saver Plan

                                                                              • Advertising and Marketing Activity

                                                                                • Adspend on savings more than doubled in 2017/18…
                                                                                  • Figure 26: Total above-the-line, online display and direct mail advertising expenditure on investment and savings products, 2013/14-2017/18
                                                                                • …but spend on children’s savings and investment products is marginal
                                                                                  • Other selected marketing activity
                                                                                    • Social media and online search
                                                                                      • Sponsorships and partnerships
                                                                                        • Nielsen Ad Intel coverage
                                                                                        • The Consumer – What You Need to Know

                                                                                          • 83% of parents are saving for their children
                                                                                            • Banks and building societies are the top choice, but piggybanks still appealing and online-only providers show high potential
                                                                                              • Parents still not persuaded to transfer CTFs into Junior ISAs
                                                                                                • Parents are confident in their actions but reactive about education
                                                                                                  • 63% of children say they save money themselves
                                                                                                    • Parents could be doing more money-related activities with their children
                                                                                                      • Two thirds of kids say they are in control of their money
                                                                                                      • Who Saves for Children?

                                                                                                        • 83% of parents are saving for their children
                                                                                                          • Figure 27: Proportion of parents who are saving for their children aged 10-15, March 2018
                                                                                                        • Vulnerable consumers under the most pressure
                                                                                                          • Dads are more likely to save regularly than mums
                                                                                                            • Figure 28: Proportion of parents who are saving for their children aged 10-15, by gender, March 2018
                                                                                                          • Parents of older children are less likely to save on a regular basis
                                                                                                            • Figure 29: Proportion of parents who are saving for their children aged 10-15, by child’s age, March 2018
                                                                                                        • How Parents Save for Children

                                                                                                          • Piggybanks still appealing…
                                                                                                            • Figure 30: How parents save for their children, March 2018
                                                                                                          • …but banks and building societies are the top choice
                                                                                                            • Parents likely to consolidate saving methods as children get older
                                                                                                              • Figure 31: Number of ways of saving for children, by age of child, March 2018
                                                                                                          • Products Used for Children’s Savings

                                                                                                            • Parents still not persuaded to transfer CTFs into Junior ISAs
                                                                                                              • Figure 32: Products held by parents saving for their children, March 2018
                                                                                                            • Children’s savings accounts offer an attractive, straightforward alternative
                                                                                                              • Transitioning child-specific products into adult accounts could support long-term savings
                                                                                                              • Parents’ Attitudes towards Children’s Savings

                                                                                                                • More than half of saving parents keep the amount a secret
                                                                                                                  • Figure 33: Parents’ attitudes towards children’s savings, March 2018
                                                                                                                • Confidence is high that parents are making the right choices
                                                                                                                  • Figure 34: Agreement with the statement “I feel confident that I am saving/investing for my child in the best possible way”, by current financial situation, March 2018
                                                                                                                • Most parents use paid chores to teach kids about money
                                                                                                                  • Figure 35: Agreement with the statement “I offer my child the chance to earn money by helping me with tasks (eg household chores)”, by child and parent gender, March 2018
                                                                                                                • Three in five will only talk to their child about savings when they show an interest…
                                                                                                                  • …while 71% only allow approved purchases
                                                                                                                    • Figure 36: RoosterMoney’s Savings Goals Feature
                                                                                                                • Who Children Say Saves for Them

                                                                                                                  • 63% of children say they save money themselves
                                                                                                                    • Figure 37: Who children say is saving money for them, March 2018
                                                                                                                  • Children of older parents more likely to say their parents are saving for them
                                                                                                                    • Figure 38: Who children say is saving money for them, by age of parent, March 2018
                                                                                                                  • The Bank of Gran and Grandad?
                                                                                                                  • Children’s Saving Activities

                                                                                                                    • Parents could be doing more money-related activities with their children
                                                                                                                      • Figure 39: Child and parent saving activities, March 2018
                                                                                                                    • Learning about money, the fun way
                                                                                                                      • Children may need some nudging to get them more involved in saving money
                                                                                                                        • Figure 40: Children’s saving activities, March 2018
                                                                                                                      • Gender stereotypes reflected in children’s savings goals
                                                                                                                        • Figure 41: Children’s savings goals, by gender, March 2018
                                                                                                                    • Children’s Attitudes towards Saving

                                                                                                                      • Two thirds of kids say they are in control of their money
                                                                                                                        • Children want to talk about money and need someone to listen
                                                                                                                          • Figure 42: Children’s attitudes towards saving, March 2018
                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                          • Abbreviations
                                                                                                                            • Consumer research methodology