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Treasury pledges an open market for CTFs

After two years and three rounds of consultation, the Treasury has finally announced the launch of its Child Trust Fund savings initiative, although final details will not be published until the summer.
The scheme, which is expected to be available from 2005, will see initial cash endowments of £250 for every child born since September 2002, rising to £500 for the poorest children.
Additional contributions from the child&#39s relatives of up to £1,000 a year will be allowed into the funds, which will be locked away until the holder reaches the age of 18.
The Treasury has reaffirmed its commitment that the funds will be sold on the open market but final details on product specification, sales regulation, limits on investment risk and details on contribution incentives will not be published until the summer.
In his Budget speech, Chancellor Gordon Brown said there are 700,000 children born each year who would benefit from the plan. He also said when it was launched it will be backdated to September.
Conservative leader Iain Duncan Smith immediately attacked the scheme in his response, saying it would only serve to over-complicate the savings process and extend means-testing even further.
Brown said: “I can tell the House that for every child born from today we will establish in their name a Child Trust Fund…The Child Trust Fund symbolises the difference between those who believe in modernising the welfare state and those who wish it to wither away.”
The Marketplace investment expert Ken Rayner says: “As an industry already suffering from poor performing stockmarkets and low interest rates there needs to be clarification as to how commercial companies can deliver such a trust fund.”


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Outside edge

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