By politics.co.uk staff
The abolition of the child trust fund (CTF) on New Year's Day will deprive tens of thousands of children of a "vital nest egg", a thinktank has argued.
The report, by the left-leaning thinktank the Institute for Public Policy Research (IPPR), claims that the savings the government will make from scrapping CTF payments - £14 million - is relatively minor compared to the impact on the life chances of 87,300 children.
IPPR director Nick Pearce said: "Although we understand the pressure on the government to make savings, we think axing the child trust fund is a mistake. We are especially concerned about the impact on children in care.
"The cost to the taxpayer is tiny, while the small amount of savings that the child trust fund would give to teenagers in the care system could make a significant difference to their lives."
The government has insisted the universal payment is no longer affordable given the scale of the deficit reduction programme.
CTF payments involved £250 assigned to new-born children since 2002, with the figure doubled for the poorest third of families.
Last year, Labour introduced further payments kicking in at the age of seven. But in August this year, the CTF was drastically scaled back to a baseline of £100 for new-borns and scrapped entirely for seven-year olds.
The scheme will be abolished in its entirety on midnight this New Year's day. A new scheme of 'junior ISAs' is being considered by the coalition as a replacement, with family and friends encouraged to pay into children's savings.
Mr Pearce was pessimistic about the plans, however, pointing out that such a scheme would "not help children who do not have a parent to save for their future".