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Calls to save CTFs grow louder

Calls to save CTFs grow louder

Category: Savings

Updated: 14/10/2009
First Published: 14/10/2009

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 It is now over 6 months old so the content may be out of date.

The usefulness of child trust funds (CTFs) as a tool to teach children about saving has been highlighted as a further reason why these under threat accounts should not be scrapped.

Last week's announcement by the Shadow Chancellor George Osborne that the Conservative Party would cut spending on the funds should it reach power has since drawn considerable criticism.

At present, all families receive a £250 voucher when their child's birth is registered, with an additional £250 (£500 for poorer families) paid in by the Government on the child's seventh birthday.

However, under the Tory proposals, new spending on CTFs would be stopped for all but the poorest third of families, while the Liberal Democrats have gone even further by saying they would scrap the scheme altogether.

Responding to the announcement, Victoria Nye, director of education at the Investment Management Association (IMA), said that CTFs were an ideal hook to encourage children to learn the importance of saving money.

"It's a lesson from which all children, and in time, the State finances will benefit, as more people save younger and for longer," she added.

"The Personal Finance Education Group (pfeg) is already working with primary school teachers across the country on this very theme, knowing that all seven year olds have a CTF. Cutting CTFs would undermine the value of those lessons and could potentially halt further progress in promoting a savings culture among young people."

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