HISTORIC PRESS RELEASE : Child Trust Fund Proposals Published [October 2003]

The press release issued by HM Treasury on 28 October 2003.

Detailed proposals for the Child Trust Fund (CTF) were published today.  As the Chancellor announced in Budget 2003, each child born on or after 1st September 2002 will receive an initial endowment of £250 rising to £500 for the poorest children – a reform which is progressive and universal, benefiting every child and with more to those who need help most.

Amongst the measures announced today are:

• The Government will make a further payment when children are seven years of age. The amount of this payment will be confirmed at a later date.
• Family and friends will be able to contribute up to £1200 a year between them to the fund.
• It will not be necessary to make a specific claim for the CTF – access will be through the child benefit system.
• Providers will be able to offer a variety of accounts. However all providers must offer a stakeholder account – a low cost risk-controlled equity account.
• All income and capital growth will be tax exempt.
• Special arrangements will be made for children in care.

The fund will help to build up a stock of assets for the young person to reinvest or use when they reach 18 years of age, giving them added security and opportunity in adulthood.  Financial education will also help individuals to make better financial choices throughout their lives.

Commenting on the proposals, Financial Secretary Ruth Kelly said:

“The Child Trust Fund will ensure that children will have assets of their own to help them get a better start to their adult life.  It is a leading example of the Government’s commitment to an active welfare strategy based on the principles of security, opportunity and responsibility for all.

“It will also give young people experience of savings and investment opportunities and help them to manage their finances better in later life.”