Tax-free saving and a lump sum starter of £250 - free from the government - are good incentives, but many parents with children who qualify for the government’s child trust fund scheme have yet to invest their vouchers, it seems.

Sainsbury’s Bank estimates that child trust fund vouchers worth over £60 million have been misplaced or lost by parents. It is urging them to obtain replacement vouchers from the Inland Revenue's child trust fund (CTF) helpline on 0845 302 1470 between 8amand 8pm. There is no charge for reissuing vouchers.

The bank believes that one of the main reasons why people have delayed investing their children’s child trust fund vouchers is that they may be confused and overwhelmed by the number of different schemes to choose from. There are around 75 companies marketing child trust funds.

The CTF is a new and simple way to save tax free for your child. The scheme aims to make certain that every qualifying child has a savings account with a useful sum of money in it by the time they reach the age of 18.

When your child reaches 18 the fund will close and your child will be free to either reinvest their money somewhere else or spend it as they choose. Some children may use it to travel. Others might choose to study, buy a car, or put it towards a flat.

Steven Baillie, CTF manager, Sainsbury’s Bank said: "The large selection of schemes to choose from has probably meant that some parents have delayed opening accounts for their children but the longer they wait the greater the loss of return."

"Indeed, as an example, by delaying opening a child trust fund for just one year and not making monthly contributions of £20 during that period, you are likely to reduce your returns by around £645 over 18 years."

To start each child’s CTF account off, the Government will put in £250. This amount will rise to £500 for families in receipt of full Child Tax Credit (families whose income is currently less than £13,230).

It may sound too good to be true, but it is ‘free’ money for your child. On your child’s seventh birthday, the Government will make a further payment into your child’s CTF account. The amount of this is still to be announced.

Once the child's savings account is open parents, grandparents, relatives and friends will all be able to pay in up to a total of £1200 each year, tax free, to help the account grow.

If your child was born on or after the 1st September 2002 and receives child benefit they qualify for a Child Trust Fund.

Sainsbury’s Bank Child Trust Fund is offered in association with Family Investments, a mutual organisation. As a stakeholder fund, its annual charges are capped at 1.5%. The Bank says their service is easy to use as parents can make use of the supermarket’s flexible opening hours and parking. They are also offering additional discounts worth £30 to be used in the store for some baby and childrenswear products when you open a CTF with them.