Don't Panic If You've Done Nothing With Your Child Trust Fund (CTF) Voucher The Money Is Being Invested For You
January 2006
Last week was the deadline to claim your Child Trust Fund (CTF) voucher on behalf of your child. Any child born after the 1st Sep 2002 is entitled to receive at least £250 from the government. The payment is designed to kick start a savings account for the very young and parents, relatives and friends can boost the amount in the fund up to £1,200 a year, any gains are tax-free.
Quick CTF Facts
- A savings account in the name of your child that can be accessed at 18+ only
- No tax to be paid on any gains generated over the years
- £250 voucher, may go to £500 if from less well off family via a Child Tax Credit (CTC)
- The fund can be topped up by anyone, parents, relatives, friends etc up to a maximum of £1,200 pa
- The govt will add more money when the child is 7, no information on how much though
- Money can be invested in cash or the stockmarket via specialist CTF funds and accounts setup by the major banks/building societies (all charges are capped at 1.5% pa)
- A key long term feature of the account is to teach parents and children more about money and investing in general
Many Parents Didn't Claim - No Worries Though The Money Is Still Being Invested
For parents that did claim the voucher they had the choice of where to invest the money either in savings accounts stakeholder (usually a fund that tracks the performance of the stockmarket) or non-stakeholder accounts (a fund that is actively managed so has the potential to both out-perform and under-perform the overall market).
But for parents that didn't claim their voucher(s) all is not lost because the money has been automatically deposited into 1 of 11 stakeholder run by the High Street banks and building societies. This money can then be moved to other Child Trust Fund accounts free of charge.
All parents will have been sent an information pack over the last year but for those who have lost the pack or never received it then contact the Child Trust Fund Office on 0845 302 1470 or see their excellent website at www.childtrustfund.gov.uk
Summary
We like the Child Trust Fund idea and not really for the free money aspect, that is a bonus. No, we like the education angle and any parent would do well to make sure that their child takes an interest in how their money is being invested, and the relative advantages and disadvantages about having it in cash or stocks or perhaps a mixture of both.
Of course, the education part won't come into play until the children are teenagers but by then the money pot might have grown into a sizable nest-egg making an interest seem even more attractive.
See Also
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