News on the Child Trust Fund
Established by the Labour government in 2005, the Child Trust Fund was a savings and investment account available for all children at birth, receiving £250 free to start their account and a further £250 when they reach the ages of seven and eleven.
Families could add to the fund over time, building up a ‘nest egg’ for young people when they leave education to give them a good start in their adult lives. For parents who did not claim the £250 and open a Child Trust Fund when their child was born, a ‘stakeholder’ account was be set up on behalf of the child by the government allowing parents to claim the fund later.
A total of 7,045 children in the Streatham constituency now have Child Trust Fund accounts. These families along with many others were dealt a harsh blow when, within weeks of the general election, the new LibDem – Tory coalition government announced that it would abolish the fund. The money already paid into the fund will still be accessible when a child turns 18, but from January 2011 the government will stop paying into the scheme.
However, 2,581 children in Streatham are yet to have a Child Trust Fund opened on their behalf by their parents. For children in this position, a ‘stakeholder’ account is set up and managed on their behalf by the government.
Chuka has pursued the full details of the impact that the Child Trust Fund’s abolition will have on the people of Streatham. He submitted a written question to the Chancellor of the Exchequer to ask whether parents and guardians would be able to take control of stakeholder Child Trust Fund accounts after January. The reply from the Treasury confirmed that such accounts will indeed remain under the full control of parents or guardians, who if they wish can choose to transfer the account to a different financial provider or type of account. The money remains the child’s and he or she cannot withdraw it until they turn 18.
