Teenagers want child trust fund restrictions
Teenagers want to see greater restrictions imposed on the way money from child trust funds is spent, a new report says.
The tax-free savings scheme, which provides teenagers with a sum of money on their 18th birthday, currently allows account holders to spend the money as they choose.
According to the Economic and Social Research Council, there is a broad understanding among policy makers about the undesirability of specifying ways in which the money is spent, but not among teenagers themselves.
Groups of 18-year olds interviewed by researchers were strongly in favour of restrictions on the way the money is spent.
But if their list of things on which to spend the money is anything to go by, restrictions are unnecessary.
Higher education was the number one priority, followed by a car, starting a business or saving for a deposit on a home.
Under the child trust fund scheme, parents of children born after September 1st 2002 are given a £250 voucher, with children from poorer backgrounds receiving an additional £250, to invest on their child’s behalf.
The fund builds up interest tax-free and can be topped up by friends and family of the child by up to £1,200 a year.
Professor Andrew Gamble of the University of Sheffield, who led the study, said: “The child trust fund is important and unusual because it is the first new universal benefit for 50 years and the first capital grant scheme to open anywhere in the world.”
“The fund is also different because, unlike many government policies, it is long-term, with the money tied up for 18 years. It is clearly aimed at changing attitudes and behaviour.”
Most funds are expected to realise at least £1,000 by the time a child turns 18, but the majority of 18-year olds felt that a sum of £10,000 could make a real difference to young people’s lives.
On the other hand, a sum of £50,000 was seen as too much for young people to handle responsibly.
The scheme was officially launched in January 2005, having been announced in the 2003 Budget.
It has not been a universal success as yet, with many parents failing to invest their children trust fund vouchers.
In June, figures from HM Revenue and Customs indicated that more than 70 per cent of eligible parents were yet to open accounts with their child trust fund vouchers.
