The Institute for Public Policy Research believes that the government should introduce a tiered system for child trust funds.
In their recent report, they have recommended that top-ups should be divided into 3 tiers, based on parental income, with those on lower incomes getting a bigger contribution, as they get older. They believe that children aged 7 belonging to a household with a gross income of less than £17,600 a year should receive a £650 top up, while children whose household income was between £17,600 and £26,800 receive a £500 voucher, and those with more than £26,800 get a £200 voucher.
For children aged 12, whose parents have the lowest income, the report recommends a payment of £800, with £500 for those in the middle-income group and £150 for those in the top group.
The research has found that this system would cost the same as providing £250 and £500 at each age. The institute has found that one fifth of children in the UK would receive the maximum top up, and a further one fifth would receive the middle top up.
Our view
The Child Trust Fund, in our opinion, is an utter waste of OUR money. We believe it will ultimately be withdrawn as yet another government gaff.