Coalition Cuts Begin
CHILD TRUST FUND - scrapped
The coalition government have announced that ALL payments to the child trust fund are to be stopped by January 2011.
Orginally the scheme was set up for children born on or after 1 September 2002 to provide long-term savings to help with adult expense. The scheme has been the single most successful savings policy to date.
At present, new parents receive a minimum £250 voucher to invest for their children (£500 if income is below £16,190) which they can access at age 18. A further payment is made when the child reaches age . This top up will now be scrapped as of 1st August 2010.
From April 2009, if you received Disability Living Allowance (DLA) for your child, your child received an annual payment of £200 if their DLA award included the highest rate care component and £100 if they were entitled to any other rate of DLA. These payments were paid directly into the CTF account starting from April 2010. These payments are now scrapped.
I have an existing fund - what happens now?
If an account has already been opened, it will continue as usual and the child will not be able to touch the money until age 18.
Family and friends can still add up to £1,200 a year into the account and it will be tax free.
From 1st August this year, payments at birth will be reduced from £250 to £50 for better off families and from £500 to £100 for those earning less than £16,190. Payments for those aged 7 and those receiving Disability Living Allowance will stop.
All payments will cease from 1 January 2011.
Helen Wild
Welfare/Benefits Adviser for DSA