Baby Love – Child Trust Funds
Kids grow up so fast. Now is the time to start saving for them so by the time they are 18, you don’t have to stress about funding their education, homes etc.
The Government in UK give money (a voucher) to every baby born, which has to be deposited into a Child Trust Fund but it has now taken a twist.
I have to admit The Government in Britain are a bit generous. I write “a bit” because the Tax we pay on earnings is not low. Benefits include:
- Job Seekers Allowance / Income support – for those not working.
- Family Tax Credit – for those on low income.
- SMI Support Mortgage Interest – for those who can’t pay their Mortgage and are not working.
- Housing Benefit – same as above but do not own their homes.
- Child Benefit – Weekly benefit paid to every kid irrespective
- Disability Allowance.
- (CTFs) £250 for every baby born to put in a Child Trust Fund.
Since April 1995, the government in the UK gave £250 to every child born. £500 for low income families. They were issued as FREE Cash vouchers and parents were to choose a Bank Account for it to be deposited. Parents can add to the money if they want. The money is locked away until the child’s 18th Birthday and then they will get a lump sum.
Well, “thanks” to the Coalition government from 1 August 2010 this £250 payment will now be reduced to £50 or £100 to low income families and from Jan 2011 - it will stop altogether.
There are 2 types of CTF’s
Savings Type – this is similar to a saving account with a guarantee of getting all the money deposited plus interest.
Investment Type – On this, there is no guarantee you will get all your money back as you are risking money on the stock market.
** The exceptions to withdrawals are: sadly, if the child dies or is terminally ill. Otherwise, it has to stay in the bank till the child is 18.
If your voucher is not used within a year, the government will choose an account which might have very little interest. So, use the Voucher Now. Also, if your child is not eligible, it would still be a good idea to start saving for him/her now.
As stated above – the Government have been generous but this news will sure come as disappointment to many.
For Readers outside the UK – Do you have something similar in your country whereby the government supports your kids?
Thanks for reading.
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