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Child trust fund scrap 'will not affect many'

By Sarah Engle, Tue 3 Aug 2010 - Published in Banking

The coalition government's decision to scrap child trust funds will not make a great deal of difference to many parents, an expert has argued.

On May 24th, the coalition revealed that it will reduce and eventually cease payments into the products. After August 1st, child trust funds will receive just £50, down from £250, from the government and the products will be abolished in January.

Commenting on the move, Ark Financial Planning director Phil Perry said that the change will not be noticed by many people, explaining: "I don't think it is particularly going to hit anybody."

"It was just an incentive to try and get people understanding that you should save for your children," he added.

Mr Perry also said that reducing the payments to £50 for the next few months is a wasteful step, as it is so small it will not encourage parents to start regularly saving for their child.