Scrapping child trust funds will harm poor

Scrapping Child Trust Funds will hit the poorest families hardest, the chief exectuive of a leading charity told the Parliamentary Committee considering Coalition legislation to scrap Child Trust Funds.

Scrapping Child Trust Funds will hit the poorest families hardest, the chief exectuive of a leading charity told the Parliamentary Committee considering Coalition legislation to scrap Child Trust Funds.

Anne Longfield OBE, Chief Executive of 4Children, highlighted figures that showed that of money put into accounts by Government, 97% went to households with an income below £50,000, 70% to households with average incomes or below, and 50% to the 1.5 million families on the lowest incomes (under £16,000).  
 
She said: “Whilst everyone accepts the need for spending reductions the scrapping of Child Trust Funds is a regressive and disappointing decision. While prosperous parents will continue to make financial provision for their children’s future, children from modest and low income families will miss out – starting adult life with yet another disadvantage.”   
 
She added that for families on modest incomes who can afford to make a small monthly contribution to their children’s accounts, but which mounts up over time, the simplicity and automatic nature of the current system is important. 
 
“Currently parents are automatically notified about the account when their child is born, this is an important ‘nudge’ that gets more families saving for their children’s future," she said.  "Scrapping the apparatus that gives that ‘nudge’ will inevitably mean fewer children reach maturity with a nest-egg.  Given recent announcements about the future costs of higher education you would think that as many parents as possible should be encouraged to save for their children’s future.” 





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