This has been trailed for some time now and at last we have “lift off” so to speak.
The Child Trust Fund (CTF) will be introduced to benefit children across the UK by:
- providing an initial endowment at birth for every child of £250, rising to £500 for children from low-income families who also qualify for full Child Tax Credit - around a third of all children;
- allowing additional contributions to be made by parents, family members and friends, up to an annual limit of £1,000;
- being accessible when children reach 18 years of age, whereupon there will be no restriction of the use of assets – share prices in Pubs, Clubs and Off-licences surged on the announcement of this news; and
- being delivered through open market competition, with accounts expected to be available by 2005, enabling a wide range of authorised providers to offer the CTF.
The Government will publish further details of the CTF in the Summer 2003 including product specifications, sales regulation, limits on investment risk, the default investment option and the extent of any incentives for contributions into the CTF. This will ensure that providers and other stakeholders have the opportunity to comment on the detailed implementation plans.