Child Trust Fund boost Seven year olds get CTF top-up in September
28 August 2009
The first top-ups to the Government's child trust fund (CTF) scheme will start to be sent out next week, giving additional payments of £250 or £500 to children who are turning seven.
Child Trust Funds were introduced in 2005, with all children born since September 2002 receiving £250 or £500 from the government at birth, which must be invested or deposited in a savings account until they are 18. The first of the CTF generation will turn seven this September and will receive an additional top-up. Most children will receive £250. However, those from low income families will receive £500.
Over 51,000 children were born in September 2002. By this time next year around 600,000 will have qualified for the extra CTF funds, receiving a total of £150m.
The total number of children with CTF accounts reached 4.31 million in March this year. Parents and grandparents can pay additional money into a child's CTF, and all gains and income accrued in the funds are tax-free. There are three types of CTF - cash, stakeholder shares-based and non-stakeholder shares based. For details of the scheme and a list of CTF providers see the official Child Trust Fund website.
Which? reported on Child Trust Fund providers in May 2009 and found a wide discrepancy in how they had performed. The best funds had grown significantly, with £250 invested in 2006 being worth £307 three years later. The worst had been hit by stockmarket falls however, with £250 reducing to £70 in one example.
Commenting on CTF's seven year boost, Which? researcher Ian Robinson said, 'Child Trust Funds have given many children who would otherwise miss out a potentially useful savings opportunity. An extra £250 or £500 will be a welcome addition for the generation of 2002.'
Visit the Which? website to check the rates of interest offered by cash Child Trust Fund providers and see our current Best Buys.
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