Barclays points to suspicion over Child Trust Funds

Parents are wary of the government's Child Trust Fund initiative, according to a new survey by Barclays Bank.

11:46 18 November 2004

Parents are wary of the government's Child Trust Fund initiative, according to a new survey by Barclays Bank.

The report showed that many felt the offer of 250-500 to start up a trust fund for their children was simply too good to be true.

The Child Trust Fund is a new government scheme to encourage saving, by providing every baby in England with at least a 250 savings bond. This will accrue interest tax free, and can be added to by friends or family of the child, until the fund matures on the child's 18th birthday.

To be eligible the child must have been born after September 2002 and qualify for Child Benefit. To obtain the 500 gift they must live in a household with a combined income of less than 13,500 a year.

Paul Morrish, Barclays' director of personal customers, noted: "Despite a degree of scepticism revealed in the research, people felt a Child Trust Fund would help a young person get a start in life and that it might encourage parents to save for their children."

However, the survey showed mistrust of how the fund might be spent and a greater trust of existing savings: "None of the parents expected to contribute the maximum 1,200 a year to the fund," it noted.

The Child Trust Fund was launched in April 2003 and the government will determine at a later date the size of an additional gift for children at the age of seven.