Vincent Guadagnino of Direct Line said it was “discouraging” that the cost-of-living crisis was forcing families to eat in “savings they worked hard to set aside for their children and grandchildren”.
Kevin Brown, of Scottish Friendly, said parents saved nearly 30 per cent less on each other’s child investment accounts.
He said. “The rising cost of living crisis will only get worse before things start to improve. [The poll] figures are worrying, but not surprising. ”
Savers across the country threw away less than £ 6bn in April, according to recent figures from the Bank of England. That compares with around £ 30bn at the same time in 2020, when the pandemic lockout was introduced and savings levels increased as spending, especially on transport, fell.
Parents are free to withdraw money saved on behalf of their children from standard savings accounts. Halifax, for example, allows withdrawals from its “Child Savings Accounts”, which pay 1 pc on balances of up to £ 1,000 and 0.1 pc on anything above this level.
Its fixed rate “Monthly saver” transaction, which is 2.5 pct. paid for 12 months, do not allow withdrawals unless the account has closed or the time window has expired.
Parents are also prohibited from withdrawing any money saved in Junior Isas or Child Trust Funds, which becomes the property of the child when they reach the age of 18.
Withdrawals can be made in exceptional circumstances such as the death of a child or if they are diagnosed with a terminal illness, subject to permission from HM Revenue & Customs. These rules apply regardless of the provider.