Plans to cut CTFs are widely unpopular - Savings - News - Moneyfacts


Plans to cut CTFs are widely unpopular

Plans to cut CTFs are widely unpopular

Category: Savings

Updated: 17/02/2010
First Published: 17/02/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Plans to cut Child Trust Funds (CTFs) for all but the poorest families have been widely derided by parents.

The Conservative Party proposes to cut the CTF for families with a total household income of £16,040 or more should they be voted into power in this year's General Election.

The party has said that the measure would save some £300 million a year, although The Institute for Fiscal Studies has put the figure closer to £225 million.

Research conducted by Family Investments found that almost all (96 per cent) parents consider CTFs as a positive measure, with many citing the funds as encouragement to save for their children's future.

It also appears that the plans are not widely known by parents. Almost three quarters of parents said they were unaware of the potential threat to a universal CTF programme.

The same number said they would look upon any party introducing the cut in a less favourable light.

"It is hard-working, low and middle income families who will be really hit by these spending cuts," said John Reeve, chief executive at Family Investments.

"These are exactly the kind of families who may want to save for their children's future but need the help and encouragement to do so. To get rid of the CTF before the long-term benefits have been realised seems very strange."

An estimated two million parents and relatives make regular contributions to CTFs amounting to around £22 million a month.

Find the best savings accounts for you - Compare child trust funds

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings rates plummet to fresh lows yet again

It’s becoming a recurring theme, and unfortunately, it’s showing no signs of stopping. Savings rates have plummeted to fresh lows once again as the impact of the base rate cut continues – and this month, product availability has followed.

Less than half of savings accounts beat inflation

Official figures show that inflation jumped up during September, with CPI rising to 1%. Not only does this mean that consumers may begin to feel the impact on their wallets, but there are now far fewer savings accounts that will beat inflation.

Number of savings accounts falls to record low

As if the continued drop in savings rates wasn’t bad enough, our latest research reveals another blow to already hard-pressed savers, with the number of accounts available having fallen to a record low.