A Child Trust Fund (CTF) is a long-term savings or investment account for children in the United Kingdom. New accounts cannot be created but existing accounts can receive new money. They have been replaced by Junior ISAs.
The UK Government introduced the Child Trust Fund with the aim of ensuring every child has savings at the age of 18, helping children get into the habit of saving whilst teaching them the benefits of saving and helping them understand personal finance. The Child Trust Fund scheme was promised in the Labour Party's 2001 election manifesto, and launched in January 2005, with children born after 1 September 2002 eligible.
Eligible children received an initial subscription from the government in the form of a voucher for at least £250. In 2010/11 the child trust fund policy was expected to cost around £520m, less than 0.5% of the £84bn UK education budget. Because the scheme allows for family and friends to top up trust funds, it has given a substantial boost to savings rates, particularly among the poor. According to the Children's Mutual, "In terms of changing people's behaviour, this is the most successful product there's ever been." For households with income of £19,000 a year, 30% of the children in that category are having £19 a month saved for them. Part of this is due to grandparents being more willing to contribute to funds, since the money cannot be diverted to the family finances. Creation of new funds and Government payments into them were ended in January 2011 by the Savings Accounts and Health in Pregnancy Grant Act 2010.
Read more about Child Trust Fund: Background, Details, Subscriptions, Abolition
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