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Kelly says fund firms and life offices can offer child trust fund

Fund firms and life offices will be included in the distribution plans for the child trust fund, ending concerns that only banks and building societies would be allowed to sell CTFs.

Statements accompanying the pre-Budget report last November raised doubts among fund companies because, although it said the products would be sold on an open market basis, it only mentioned banks, building societies and friendly societies within that framework.

But in response to questions tabled by Conservative Shadow Paymaster General Stephen O&#39Brien last week, Treasury Financial Secretary Ruth Kelly confirmed that an open market will include fund managers and life insurers.

Kelly also said any further decisions about the scheme would be made as part of the normal Budget process.

There has been speculation that it could take up to three or four years for the scheme to start operating as it could require primary legislation to enable Government funding.

The Government will provide cash endowments to every child at birth and specified ages, believed to be six, 11 and 16, with the funds maturing at 18.

Fidelity spokeswoman Jo Roddan says: “We welcome this. Past performance shows that equities have outperformed cash over the long term. There was a definite need for fund managers to be able to participate in this scheme.”

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