866-997-4948(US-Canada Toll Free)

Saving and Investing for Children - UK - April 2015

Published By :

Mintel

Published Date : Apr 2015

Category :

Banking

No. of Pages : 60 Pages

Due to the initial government incentivisation Child Trust Fund ownership levels have remained considerably above those for Junior ISAs. However, as of April 2015 CTF owners have the option to switch their accounts to JISAs. As the JISA market is far more competitive than the now-stagnant CTF market, this is a significant opportunity for providers and consumers, yet awareness of and interest in JISAs remains low. Providers would do well to improve this so as to maximise this opportunity for themselves and children’s savers.
Table of Content

Introduction

Abbreviations

Executive Summary

The market
Market expected to grow as number of children increases
The economic environment is slowly improving for families
Regulation change and Budget announcements have big implications for the children’s savings market
Key players
Children’s savings products low priority for provider advertising spend
Encouraging engagement through financial education is key to company strategy
The consumer
Growing proportion of parents say nobody saves on behalf of their child
Figure 1: Saving on behalf of children, February 2015
JISA ownership has increased but remains subdued
Figure 2: Ownership of children’s savings products, February 2015
Majority of parents’ motivations for their children’s savings are non-specific, but university costs account for a large proportion
Figure 3: Reasons for saving for children, February 2015
Limited application of tax to children’s savings accounts dampens interest in tax-free products
Figure 4: Consumers’ understanding of how tax is applied to children’s savings, February 2015
The savings habits of parents
Figure 5: Attitudes towards savings habits, February 2015
Desire to save on children’s behalf is not always strong enough to motivate parents to take a stricter approach to budgeting
Figure 6: Parent attitudes towards savings budgets, February 2015
A fifth of parents would be interested in purpose-specific children’s savings products
Figure 7: Parent attitudes towards reasons for saving for children and relevant products, February 2015

Issues and Insights

The market for a ‘university savings account’
The facts
The implications
Saving for children is about more than the accumulation of value
The facts
The implications
The Child Trust Fund to Junior ISA Transition
The facts
The implications

The Market – What You Need to Know

Projected 6% increase in under-15s population in next five years
Family finances begin to improve, but concern about the future remains elevated
Switching to JISAs possible for CTF owners from April
JISA subscription limit increased but interest in product undermined by lack of necessity for tax-free children’s savings products

Market Size and Growth Potential

Market size for children’s savings products
Figure 8: Estimated number of children’s savings accounts, by type, 2014
Market growth potential
A number of caveats to keep in mind

The Economic Environment for Families

Family finances finally begin to improve
Figure 9: Consumers’ assessment of their current financial situation (in terms of how this compares to 12 months ago) and how confident they are for the next 12 months, by presence of children, February 2015

The Regulatory Environment

Child Trust Fund owners allowed to switch to Junior ISAs
Budget 2015: Boosts to Savers
Junior ISAs
Figure 10: Junior ISA subscription limits, 2011-15
Help-to-Buy ISA
Personal Savings Allowance

Key Players – What You Need to Know

Children’s savings accounts dominate the market
Junior ISAs are far behind
Adspend for children’s savings products continued to fall in 2014
The role of education in competing for new business

Product Range

Children’s Savings Accounts
Child Trust Funds
Junior ISAs
Figure 11: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2013/14
Bonds

Advertising Spend

Children’s savings products low priority for advertising expenditure
Figure 12: Total advertising expenditure on children’s savings and investment products (including junior ISAs), 2011/12-2014/15
Press is the main media type used
Negligible adspend on Junior ISAs
Figure 13: Total advertising expenditure on junior ISA products, 2010/11-2014/15

Competitive Strategies

Education is the way forward
Educationally driven product design
Providing online support
Branching out
Alternative providers
Channels to market

The Consumer – What You Need to Know

34% of parents say nobody saves on behalf of their children
Growth potential of Junior ISAs
Future uncertainty drives parents to save
2015 budget reduces the need for parents to understand tax applications for children’s savings
More than a fifth currently cannot afford to save for their children…
but few take active steps to change this
The market for goal-specific products…
but also products that progress as the child develops

Saving on Behalf of Children

More than a third of parents state that nobody saves on behalf of their children
Figure 14: Saving on behalf of children, February 2015
Increase in the number of grandparents saving for their grandchildren
Figure 15: Number of contributors to children’s savings by individuals contributing, February 2015
Parents of younger children more able to save
Figure 16: Contributors to children’s savings, by detailed life-stage, February 2015
Lack of support for those on lower incomes…
particularly single parents
Figure 17: Contributors to children’s savings by current marital status, February 2015

Children’s Savings Products

Ownership of Junior ISAs continues to increase
Figure 18: Ownership of children’s savings products, February 2015 and March 2014
Cash-based products lead the way
Figure 19: Ownership of children’s savings products, February 2015
Risk aversion and lack of understand discourage investing
Two thirds of consumers hold their children’s savings in just one product
Figure 20: Number of children’s savings products held, February 2015

Reasons for Contributing to Children’s Savings

Future uncertainty drives parents to save
Figure 21: Reasons for saving for children, February 2015
Education costs are the second most popular reason to save
Parents of older children are more likely to have definite savings goals
Figure 22: Those contributing to their children’s savings for their future/general savings, by life-stage of family, February 2015
Encouragement for children to save comes from a range of sources
Figure 23: Number of people saving on behalf of children, by reasons for saving for children, February 2015
Figure 24: Ownership of children’s savings accounts, by reasons for saving for children, February 2015
Rising costs of university boosts ownership of children’s savings products…
Figure 25: Repertoire of children’s savings products, by reasons for saving for children, February 2015
.but it can become demoralising when goals are not achievable
Figure 26: Proportion of parents saving for the cost of university/education, 2010-15

Tax and Children’s Savings Accounts

Majority of parents are unaware or unsure of how tax is applied to children’s savings
Figure 27: Consumers’ understanding of how tax is applied to children’s savings, February 2015
Low awareness dampens interest in tax-free products
Figure 28: Children’s savings products, by consumers’ understanding of application of tax to children’s savings, February 2015

The Savings Habits of Parents

Strong sentiment to encourage children to manage their own money does not translate into proactive action
Figure 29: Attitudes towards savings habits, February 2015
Parents that are more engaged take more proactive action
Figure 30: Attitudes towards saving and investing for children, by number of children’s savings products owned and saving for the purpose of encouraging child to save, February 2015
The digital opportunity to encourage wider engagement
Alternative providers
Children’s savings product providers
The benefits of facilitating conversation

Parents’ Attitudes towards Saving and Budgeting

More than a fifth currently cannot afford to save for their children…
Figure 31: Parents’ attitudes towards savings budgets, February 2015
but few take active steps to change this…
unless motivated by a quantifiable goal that makes saving easier
Figure 32: Proportion of parents who spend less on non-essential items for themselves so that they can contribute to their children’s savings, by reasons for saving for children, February 2015

The Developing Product Market

The market for goal-specific products
Figure 33: Parents’ attitudes towards reasons for saving for children and relevant products, February 2015
Products that progress as the child develops
Figure 34: Parents’ attitudes towards savings habits, by age of children in family, February 2015
The potential to boost Junior ISA sales through a focus on education
Figure 35: Proportion of parents that encourage their children to manage their money and spend less on non-essential items for themselves to contribute to their children’s savings, by JISA ownership

Make an enquiry before buying this Report

Please fill the enquiry form below.

  • Full Name *
  • Your Email *
  • Job Title
  • Company *
  • Phone No. * (Pls. Affix Country Code)
  • Message
  • Security Code *

Upcoming Reports

  • Sugar and Gum Confectionery - UK - January 2015

    Rising dental health concerns can create an opportunity for chewing gum brands. Currently much of the marketing for sugar-free gums centres around fresh breath, however, the dental health benefits, particularly for children, could warrant more focus. Though explored internationally, tooth-friendly gums tailored for children remain rare in the UK market....