Child Trust Funds to  be scrapped

The Government has confirmed the scrapping of Child Trust Funds (CTFs) in a bid to save £320 million.

The new coalition will introduce secondary legislation from August 1, under which the money children receive at birth will be reduced from £250 to £50. Children from lower income households will be paid £100, down from £500.

Also, the additional payment meted out to them when they turn seven has been abandoned.

The primary legislation is set to be introduced at the beginning of next year, after which all payments shall be stopped.

Additional contributions for disabled children will continue to be distributed this year, but from 2011/12 the money will be transferred to providing respite care for them, the Treasury said.

The previous Labour government had introduced CTFs to provide an asset to all children when they turn 18 and to encourage savings among parents for their children.

Children born on or after September 1, 2002, were eligible for this scheme. Apart from the Government vouchers, parents, friends and relatives were able to save up to £1,200 a year into the funds.

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