Friendly societies have welcomed the introduction of child trust funds from 2005 but are calling on the Chancellor to allow additional contributions to be made straight away.
The initial Government payment into the fund at birth has been set at £250 for every child. This will be raised to £500 for children from low-income families who qualify for child tax credit.
Additional contributions from parents, family members and friends will be allowed up to an annual limit of £1,000. The fund will only be accessible when the child reaches 18.
Societies welcome the move to deliver the product through open market competition but have raised concerns that parents will not be able to make payments to the schemes until 2005.
Details of product specifications, sales regulation, limit on investment risk, the default investment option and extent of contributions will not appear until summer.
Family Assurance chief executive John Reeve says: “Parents should not sit tight and wait until 2005 if they want to save for their child. By starting today with a plan such as our junior bond, they will not miss out on two years' saving opportunity.”
Treasury Financial Secretary Ruth Kelly says: “This initiative will strengthen financial education, promote positive attitudes to saving and ensure that all children, regardless of family background, will benefit from access to a stock in financial assets when they start their adult lives.”