The new Child Trust Fund seemed to be a great idea from Gordon Brown. But, the Treasury have apparently decided to launch an enquiry into it because of opposition from some of the 'big boys' in the financial services industry.
A sub-committee of the Treasury's select committee will apparently be looking into objections raised by insurance companies such as Prudential, Scottish Widows and Norwich Union.
The problems raised are regarding the charges that providers are allowed to make when administering these trust funds.
Our View
The details for the Child Trust Fund are still very woolly at the moment. What we do know is that the Government will make an initial payment of £250 on the birth of a child. This will increase to £500 for poorer families. The Government then intends to match £1 for £1 up to a certain limit for saving during the child's life.
We believe that this savings opportunity should be grabbed and held onto by everyone eligible. Where else can you double your money overnight? One word of caution though. As the 'big boys' are querying, always watch the amount you are being charged to run this type of savings fund. The more the charges, the lower the ultimate return to you.