Thursday 26 November 2009

Child Trust Funds slump

As if people's lives weren't hard enough at the moment the Government appears to be encouraging parents to stick their cash in a loss making scheme.

A Labour MP came to Lobbydog complaining that HM Treasury was haranguing him to try and get more of his constituents signed up to the Government's Child Trust Fund.

Under the scheme parents get a £250 voucher to open the fund. They are free to pay in whenever they want and then they get regular update letters showing them how much money is accruing.

The problem is that it isn't, accruing I mean. The money in the trust fund is invested in stock, property, or whatever the particular chosen scheme deals in.

Obviously during a recession, as the value of those investments drops, so will the value of the trust fund.

The MP has had parents come to him who have opened the fund with their voucher and then month by month seen the value drop - £240, £230, £220 - until some have feared they might even end up owing the Government money.

They won't of course. But even the fact that the Government wants them to put their own money in the trust fund when its value is dropping is pretty twisted.

Treasury told me it's still a good long term investment, but they should at least stop pushing it until the recession recovers. That of course would make the policy look bad.

1 comment:

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