Nectar, the UK coalition loyalty programme, has partnered with Family Investments, a Child Trust Fund (CTF) provider, to offer a CTF account that can be topped up using Nectar loyalty points.
According to Nectar's operator, Loyalty Management Group (LMG), over 41% of new parents put off opening a CTF because of confusion about the options and different funds available, and 20% leave the issue to the tax authorities to manage.
Friends and families contribute
Like all CTFs, monetary contributions can be made to a Family Investments CTF from Nectar account by friends and family. But they can also choose to contribute Nectar points to boost the account, either online or by telephone.
Research from Nectar shows that grandparents - who LMG says generally don't redeem their points as often as other Nectar cardholders - would welcome the opportunity to add the value of their Nectar points to a grandchild's account.
Set-up bonus offered
Setting up the account is simple enough and, as an introductory offer, those who open an account will gain a bonus contribution of 1,000 Nectar points upon application, plus another 1,000 points if they set up a regular direct debit to the account.
To start a Nectar-based CTF, the parent or guardian completes an application form and sends it off with a Nectar CTF Voucher. They then receive a CTF account number, along with the initial 1,000 Nectar points for opening the fund. After that, friends and family can add to the CTF account using Nectar points (in multiples of 1,000 points) by logging onto the Nectar CTF web site or by calling the Nectar helpline.
By using Nectar points to top up a CTF account, members are told they could potentially save the following amounts by the time the child is 18 years old:
- With only government contributions (and no Nectar point donations or direct debits and one-off top ups): 1,090
- With 5,000 Nectar points (worth 25) per year: 1,860
- With 10,000 Nectar points (worth 50) per year: 2,630
- With 20,000 Nectar points (worth 100) per year: 4,170
The money accumulated in a CTF account can only be accessed by the child, and not until they are 18 years old. A maximum of 1,200 (in addition to ordinary government contributions) may be added into each account every year, regardless of whether that contribution is in cash, Nectar points, or a mixture of the two.
According to Miles Bingham, marketing director for Family Investments, "The new proposition from Nectar is exciting for new parents, and presents a unique way of adding value to a child's fund."