New child trust fund drive launched
Monday, 15 Jan 2007 08:57
The government wants to help parents save for their children's future
The government is launching a new campaign today to convince more parents to take advantage of its child trust fund (CTF) initiative.
Economic secretary Ed Balls and pensions minister James Purnell are visiting a children's centre in Hackney to publicise CTF week, part of a wider national campaign publicising the voucher.
While the total number of CTFs now reaches almost 2.5 million, many eligible parents from poorer backgrounds in disadvantaged areas are failing to engage with the programme, Mr Balls says.
"The CTF's success has exceeded our expectations. At a national level, three in four parents are actively opening their child's account. Performance between different areas of the country varies but the design of the CTF means no child will miss out," he commented.
CTFs were introduced in September 2002 in an effort by the government to encourage parents to put away money for their children.
From that date every child born receives a £250 lump sum from the government, with those born to low-income parents receiving £500. A second payment is then put into the fund on the child's seventh birthday.
Parents can then add money to the account, not paying tax on interest earned for the first £1,200.
"Every day the CTF voucher stays lying in a drawer, your child is missing out on the growth this money could be earning for his or her future," financial adviser Alvin Hall said, supporting the government's campaign.
"Rest assured, if you change your mind in the future about the type of account you want for your child, you can move the money to a different one," he added.