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UK Saving and Investing for Children market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Saving and Investing for Children 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

This Report examines the UK market for children’s savings and investment products.

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.

Children’s savings accounts also include Junior cash ISAs and cash Child Trust Funds (CTFs) , which are long-term tax-free savings accounts for children, usually with a variable rate of interest. Money can be deposited into these accounts up to an annual limit (£4,128 in 2017/18) and can only be withdrawn by the child when they turn 18. However, the child can take control of their CTF or Junior ISA when they reach 16.

Also included are National Savings & Investments’ (NS&I) Children’s Bonds . Like other children’s bonds, this product offers a fixed interest rate for a set term (five years) on amounts from £25 to £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.

In addition to cash-savings products, there are various long-term investment products for children including tax-exempt friendly society children’s savings plans, stocks and shares Junior ISAs and stakeholder/investment CTFs.

For more information, see Appendix – Data Sources, Abbreviations and Supporting Information.

Expert analysis from a specialist in the field

Written by Patrick Ross, a leading analyst in the Finance sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Parents naturally feel the pressure to plan for their children’s future, but with limited investment and focus in the sector children’s saving and investment providers are doing little to support this. Low interest rates mean reduced incentives to save, although it also leaves a huge opportunity for providers to improve the value they add, giving parents the flexibility and control they want. Patrick Ross
Senior 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
            • Two thirds of parents save for their children
              • Figure 1: Proportion of adults with children and whether or not they are saving on their behalf, February 2017
            • Junior ISAs continue to show strong growth
              • Figure 2: Amounts subscribed to Junior ISAs, £m, 2014/15-2015/16
            • Low interest rates have left the market feeling uncompetitive
              • Parents are less likely to describe their finances are healthy
                • Figure 3: Current financial situation – Parents versus non-parents, February 2016
              • Companies and brands
                • Stock and Shares Junior ISAs offer competitive potential
                  • Savings adspend suffers while investment spend swells
                    • The consumer
                      • Two thirds of parents save for their children
                        • Figure 4: Proportion of adults with children and whether or not they are saving on their behalf, February 2017
                      • Child Trust Fund legacy continues despite freedom to swap
                        • Figure 5: Products used for children's savings, February 2017
                      • Online management can help deliver sought-after parental controls
                        • Figure 6: Interest in features of a new children's savings product, February 2017
                      • Parents seek rewards for saving regularly
                        • Figure 7: Interest in incentives of a new children's savings product, February 2017
                      • Parents expect their money to be used wisely
                        • Figure 8: Attitudes towards saving for children, February 2017
                      • What we think
                      • Issues and Insights

                        • Providers should cede flexibility as parents seek supreme control
                          • The facts
                            • The implications
                              • Dual parent and child benefits could attract Millennials
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • An estimated 10.7 million parents are currently saving for children
                                      • Junior ISAs grow at the expense of Children’s Bonds
                                        • Proportion of households with dependent children is falling
                                          • The child population is growing but interest rates are low
                                          • Market Size

                                            • Almost two thirds of parents are saving for their children
                                              • Figure 9: Proportion of parents who are saving for their children, February 2017
                                            • Child Trust Funds dominate product ownership
                                              • Figure 10: Proportion of parents who own various saving and investment products for the purposes of saving for children, February 2017
                                            • A note about Mintel’s estimates
                                            • Market Segmentation

                                              • Junior ISAs continue to show strong growth
                                                • Figure 11: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2015/16
                                              • NS&I Children’s Bonds to lose more favour following rate cut
                                                • Figure 12: NS&I Transactions with investors in children’s bonds, 2015-16*
                                            • The Family Environment

                                              • The proportion of families with children is stable
                                                • Figure 13: UK households and family types, 1996, 2001, 2006 and 2016
                                              • The trend towards fewer children per family has continued
                                                • Figure 14: Percentage of families with dependent children: by number of dependent children in the family, 2006 and 2016
                                            • Market Drivers

                                              • Low interest rates have left the market feeling uncompetitive
                                                • Figure 15: Average monthly quoted cash deposit and ISA interest rates, January 2008-January 2017
                                              • Funding for Lending has reduced providers’ commercial interest
                                                • The child population is expected to grow
                                                  • Figure 16: Projected size of UK child population, 2016, 2021, 2026 and 2031
                                                • Parents are less likely to describe their finances are healthy…
                                                  • Figure 17: Current financial situation – Parents versus non-parents, February 2016
                                                • …and are less certain about the immediate future
                                                  • Figure 18: Confidence in financial situation over the coming year – Parents versus non-parents, February 2016
                                              • Companies and Brands – What You Need to Know

                                                • Limited product development and innovation
                                                  • Stocks and Shares Junior ISAs offer competitive potential
                                                    • Savings adspend suffers while investment spend swells
                                                    • Competitive Strategies

                                                      • Banks have left space for building societies and challengers
                                                        • Skipton Building Society launches two accounts to meet specific goals
                                                          • Santander and HSBC target adult account ownership in the future
                                                            • Regular savings products offer tempting rates
                                                              • Stocks and Shares ISA providers make a play for child savings
                                                                • MoneyBox
                                                                  • Orbis Access
                                                                  • Advertising and Marketing Activity

                                                                    • Savings adspend falls to a new low, but investment-related spend grows
                                                                      • Figure 19: Total above-the-line, online display and direct mail advertising expenditure on investment and savings products, 2012/13-2016/17
                                                                    • Marginal spend on children’s saving and investment products
                                                                      • Nationwide bucks the trend with major TV campaign
                                                                        • Investment Junior ISAs also driving some adspend activity
                                                                          • Figure 20: Above-the-line, online display and direct mail adspend on identified children’s saving and investment products, 2016/17
                                                                        • Other selected marketing activity
                                                                          • Nielsen Ad Intel coverage
                                                                          • The Consumer – What You Need to Know

                                                                            • Two thirds of parents save for their children
                                                                              • Child Trust Fund legacy continues despite freedom to swap
                                                                                • Parents seek out maximum control over their children’s savings
                                                                                  • Parents are keen to be rewarded for regular saving
                                                                                    • Parents expect their money to be used according to their wisdom
                                                                                    • Who Saves for Children?

                                                                                      • Two thirds of parents save for their children…
                                                                                          • Figure 21: Proportion of adults with children and whether or not they are saving on their behalf, February 2017
                                                                                        • …and more than a quarter of grandparents too
                                                                                          • Figure 22: Proportion of adults with children and whether or not they are saving on their behalf, February 2017
                                                                                        • Men are more likely to say they are saving for children than women
                                                                                          • Figure 23: Proportion who are parents of children under 18 and those who are saving for them, by gender, February 2017
                                                                                      • Products Used for Children’s Savings

                                                                                        • Child Trust Fund legacy continues despite freedom to swap
                                                                                          • Figure 24: Products used for children's savings, February 2017
                                                                                        • Older parents strongly favour instant-access options
                                                                                          • Figure 25: Products used for children's savings, by age, February 2017
                                                                                      • Interest in Children’s Savings Accounts Features

                                                                                        • Online management can help deliver sought-after parental controls
                                                                                          • Figure 26: Interest in features of a new children's savings product, February 2017
                                                                                        • The passbook has a limited appeal, dwarfed by online channels
                                                                                          • Figure 27: Interest in features of a new children's savings product, by age, February 2017
                                                                                        • Providers with wealthier customers can cross-sell using online services
                                                                                          • Figure 28: Interest in features of a new children's savings product, by demographic status, February 2017
                                                                                      • Interest in Children’s Savings Account Incentives

                                                                                        • Parents seek rewards for saving regularly
                                                                                          • Figure 29: Interest in incentives of a new children's savings product, February 2017
                                                                                        • Millennial parents are the most likely to look for parental rewards
                                                                                          • Figure 30: Interest in incentives of a new children's savings product, by age, February 2017
                                                                                      • Attitudes towards Saving for Children

                                                                                        • Parents expect their money to be used wisely…
                                                                                          • …and secretive saving helps ensure sensible spending
                                                                                            • A quarter of parents have active plans for their children
                                                                                              • Figure 31: Attitudes towards saving for children, February 2017
                                                                                            • Socio-economic differences in parental approach to saving
                                                                                              • Figure 32: Attitudes towards saving for children, by demographic status, February 2017
                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                              • Abbreviations
                                                                                                • Consumer research methodology