Parents take £17m a day from children’s savings
PARENTS have raided their children’s savings to the tune of £2.75billion to make ends meet over lockdown, says a study.
Job losses or wage cuts have forced nearly a quarter of families to take an average of £700 from savings earmarked for their children’s future, according to insurer Direct Line.
The survey of 2,000 people suggests the nation’s parents took an average £17million a day out of children’s savings during the pandemic and could still take £3.34billion more.
Most said it was to cover food, utility bills and childcare. But more than one in 10 needed the money to for rent or mortgage bills and council tax.
Savings in a child’s name are usually under the control of a parent until a certain age. Experts say withdrawals are often possible, but with Junior
Cash Isas, for example parents can’t access the cash until the child turns 18.
Tom Adams, from advice website Savings Champion, said: ‘Money in a child’s savings account belongs to the child and should only be withdrawn
for a reason that is for the child’s benefit. That is to make sure people aren’t just putting their money in their children’s accounts for better rates or tax treatment.
‘However, it is difficult to prove and there is a real grey area around what would constitute being for the benefit of the child. You could certainly argue that basic living costs come under this bracket.’
One 45-year old mother said she had to take £3,000 to £4,000 from her eight-year old son’s account to keep the family afloat after her husband was furloughed. She had been paying in £120 a month since he was born. ‘It does not sit right with me. It feels wrong but I have had to do it,’ she said.
Mona Patel of insurer Royal London said: ‘This is a very sad indictment of the far-reaching consequences of Covid-19 and shows how desperate some parents have become.’