Child Trust Funds – would you trust your 18 year old with eighteen years’ worth of savings…..
Posted on 27. May, 2005 by Cashzilla in banking
Child Trust Funds (CTFs) – the low-down…
“Child Trust Funds are long-term tax-free savings and investment accounts into which the Government will pay ‘endowments’ when a child is born. A further payment of an undisclosed amount will also be paid at the age of seven. This means that each child born on or after 1st September 2002 will receive an initial lump sum payment of (currently £250 or £500 for poorer families) from the government. This will be sent in the form of a voucher which can then be used to open a CTF account with the investment provider of the child’s guardian’s choice. Parents will be able to pay up to £1,200 a year into the fund, until the child reaches 18 when the account will cease to be a Child Trust Fund account, and will usually be transferred into an easy access account. Preferential tax treatment will then cease, and any further growth in the fund after this time will be subject to normal tax legislation. Savings in a Child Trust Fund account will develop into an asset which can then be used by the child, and no-one else, when they reach the age of age of 18 (not before) to help cover some of the large expenses encountered at this time of a person’s life, and is intended to contribute towards university fees, first mortgage, etc.”
Yep rewind, “Savings in a Child Trust Fund account will develop into an asset which can then be used by the child, and no-one else, when they reach the age of age of 18″
I’m not sure that’s such a good idea – has anyone seen 18 year olds recently?
Especially the ones that go to university! A large percentage of them manage to blow the first instalment of a student loan within the first month of university and quite a few of them run up additional debts through overdrafts and credit cards.
Hmmmm no … I sense that as most 18 year olds discover copious amounts of sex and alcohol at university, financial responsibily won’t be up there in the top ten of things to do and be. If they keep on top of their dishes and laundry, it’s one giant leap in terms of student civilisation.
AND
rargh rargh rargh…
…it’s our money…
… and it’ll go straight to the Students’ Union bar….
I’m not the only one miffed by this scheme either….
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Miss James
May 30th, 2005
well, I think on the surface it’s a lovely idea isn’t it? Here is a poor parent with no forseeable means of saving for child’s education and lo, yonder government shall redeem them and henceforth allshall have cash. Well, based on previous experience, I was forced to save half of all my birthday and christmas money my whole life. When I turned 16/17, I realised I could take themoney out without parental permission, and spent it. All £57 of it. Illustrating your point nicely I think.