Government scraps child trust funds
By myfinances.co.uk staff
State contributions to child trust funds (CTFs) will end by January 2011, the Treasury has announced.
The government will introduce legislation to start phasing out the £250 vouchers given out at birth and top-up payments made after seven years from August.
Chief secretary to the Treasury David Laws said the move would save £320 million in 2010-11, climbing to £520 million in 2011-12.
"By ending government payments into this scheme we also save the £5 million annual cost of administering it," the Yeovil MP added.
Responding to the decision, CTF provider the Children's Mutual urged the five million households that already have one of the accounts to continue to make use of their tax-free growth.
A poll conducted by F&C Investments showed that 70 per cent of parents with children aged eight and under plan to carry on saving for them even if the abolition of the CTF is approved by MPs.
Every child in the UK born on or after September 1st 2002 was eligible for one of the accounts.
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