UK Money News
3rd January 2008
Child trust funds 'a waste of money'
Child trust funds have been aimed at the wrong group of people and have consequently not had the beneficial effect hoped for, it has been claimed.
Throgmorton Financial Services, an independent personal finance advisory firm, states that young parents are not interested in investments, while the £250 initial sum provided by the government is too low to be of real use later in life.
Rather, the company believes that it will be frittered away, instead of being used as a source of help with finance, by most teenagers on reaching their 18th birthday.
Colin Rothery, regional manager for Throgmorton in the north east, said: "I don't think the government did a good enough job at educating people, I don't think financial advisers did a good enough job, and I don't think that the people themselves see it as sufficient."
He added that, as a taxpayer, he felt that his money had been handed to fund holders to simply celebrate becoming 18.
The finance news follows figures suggesting that of vouchers issued in June 2006, less than three quarters were used by parents to open a child trust fund before their 12-month expiry date.
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