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Meg Munn MP - Sheffield Heeley's voice in Parliament | Welcome
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Meg on the child trust fund bill

Tuesday, February 3, 2004

Meg Munn welcomed the publishing today of draft regulations for the new Child Trust Fund Bill.

Last week in the Pre-Budget Report, Chancellor Gordon Brown announced an additional £1 billion a year investment in Britain’s children, to meet our target to reduce child poverty by a quarter in order to advance our goal that not just some but all of Britain’s children have the best possible start in life and that no child is left behind.

The Government is proposing to endow all newborn babies with a lump sum, adding subsequent top-ups at certain ages. This, with additional state and voluntary family contributions, and the interest earned, will accumulate until the child turns eighteen when the fund will provide a nest egg giving all young adults a good start in life and a sense of security and something to fall back on if necessary.

There would be no restrictions on how the money was spent.

Meg said

"I am pleased that this Bill is now before us and will be actively supporting it. I think it is a great building block that will help young people as they start their adult lives, making choices about whether they wish to study, work or train. We know that some young people live in deprived areas with high levels of poverty, where their families ordinarily could not afford to give them money to help them as they become adults.  The Child Trust fund, when it matures, could make a significant difference.

Although generous, it won’t cost the Government huge sums of money and yet, with families and relatives perhaps helping to add money to the fund for occasion such as birthdays, there could be a decent sized amount available at 18."

ENDS

The Child Trust Fund has 3 key objectives:

to ensure that all children in future have a financial asset at the start of their adult life;

to encourage parents and children to understand the benefits of saving and develop the savings habit;

to build on financial education and help people to make better financial choices throughout their lives.

How the Child Trust Fund will work

? Entitlement to a Child Trust Fund account will be linked to an award of Child Benefit, which nearly every parent in the country claims. This removes the need for a separate claim form and process for the Child Trust Fund.

? When the award for child benefit is made the parent or guardian will be sent a Child Trust Fund voucher and an information pack. The information pack will include details of all providers, a step-by-step guide to opening an account and a clear and objective explanation of the stakeholder Child Trust Fund account which all providers are required to offer. Parents - or someone else with parental responsibility - can then take the voucher to the provider of their choice to open an account.

? If an account has not been opened 12 months after the voucher has been issued, the Inland Revenue will open an account and tell the parent or guardian that this has been done and that they can now take over managing the account and that they are free to move the account to a different provider or type of account if they wish.

? Children in families receiving tax credits whose income is below the income threshold, currently £13,230, will have a second payment of £250 paid directly into their accounts as soon as the tax credit claim for the year in question has been finalised.

? A further payment will be made when the child reaches 7 and again a second payment will be made to those in families on low incomes.

? Parents and grandparents, and friends and relatives can add up to £1,200 to the account each year and all proceeds will be free of tax.

? The account cannot be touched until the young person reaches 18.





 



 


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