SOCIAL MARKET FOUNDATION
Distribution ••
Form of payment: Voucher system where parents pay providers using a smart card
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Liability: Higher earning partner
Contributions ••
Contribution income threshold: the level of the personal allowance, £8,105 in 2012-13
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Contribution rate: 6% of salary above the contribution income threshold for the main earner
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Interest rate: An interest rate of 3% above inflation applied to the amount drawn down by parents
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Maximum contribution period: 20 years
Box 5.4. Childcare payments for a middle-income family in the NCCS Let us assume that a family needs to find £50 from their own pocket a week, above the public support they are receiving, to secure a full-time childcare place. The family requires this level of support for three years when their child is aged between one and four – a total cost of £7,800 over the period. Both parents in the family work, with the main earner on £20,000 per annum and the other parent earning £10,000 per annum. Under current arrangements, the private contributions they make towards childcare would constitute 8.6% of their gross household income. If they used the NCCS, the family would lower their childcare outlay from £50 per week to around £14 by the end of year three, helping to spread the three year cost of £7,800 over 11 years. This would constitute 2.4% of gross household income per year.
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