“The Government wants more people to be able to have the running start that owning financial assets brings. It wants more young people to reach age eighteen with a financial asset that will provide them with financial opportunities and security – for example, by helping them pay for lifelong learning, or by providing them with money in a savings account that they can call on when starting a family, buying a house, or in times of special need.” Page 1, (Savings and Assets for All).
This is how Tony Blair, Gordon Brown and the rest of the then-ruling Labour Party introduced the Child Trust Fund (CTF) and affiliated legislation in 2001. It was a ground-breaking policy innovation at the time, and it is an idea from which we have drawn inspiration and insight. Unlike a Coverdell ESA or a 529 savings plan, the CTF was created to be a no-strings-attached savings account for every child born in the UK after September 2002. Similar to future TrustEgg customers, CTF account holders at the age of 18 will be free to use the money accumulated in their account for any purpose without the fees and negative tax implications associated with education-specific accounts here in the U.S.
Additionally, in the case of the CTF, the British government originally committed itself to building the financial assets of all children by depositing at least 250 pounds into every newborn’s account (500 pounds was deposited for children of more modest means). The new coalition government has ended its monetary commitment and changed the name of the program to the Junior Individual Savings Account, but the core of the idea remains.
Ultimately, this is the system we seek to create with TrustEgg, a simple and universally accessible savings program that will radically improve the savings environment for children and their families. It’s an ambitious goal, no doubt, but we believe every child deserves an equal opportunity to achieve financial freedom and success, and we’ve developed a financial product to do just that. Stay tuned.