Parents divided in their response to Child Trust Fund

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The Independent Online

While the Government embarks on its campaign to publicise the Child Trust Fund (CTFs), Barclays has found that some parents regard the fund as "too good to be true."

While the Government embarks on its campaign to publicise the Child Trust Fund (CTFs), Barclays has found that some parents regard the fund as "too good to be true."

CTFs are being introduced by the Government from April to help families build up a fund for children to use when they reach the age of 18.

Every child born after 31 August 2002 for whom child benefit is payable will receive an initial £250 from the government, increasing to £500 for those in households with gross income of £13,500 or less.

Parents, grandparents and other family members can put up to £1,200 into each fund tax-free, and there is complete freedom as to where the money is to be invested.

Barclays has conducted interviews showing that initial reactions to receiving details of the fund were more positive among low-income parents, who welcomed the £500 and recognised that it may help give their children a better start in life. Those on middle incomes felt £250 was not an impressive sum.

Paul Morrish, director of personal customers at Barclays, said: "Despite a degree of scepticism revealed in the research, people felt a Child Trust Fund would help a young person get a start in life and that it might encourage parents to save for their children.

"We urge parents, grandparents and carers not to ignore these letters, as the Child Trust Fund will provide children with a nest eggfor the future."

Professor Elaine Kempson, director of the Personal Finance Research Centre and co-author of the report, said: "The results highlight the need for Government and the industry to work together to strengthen the savings habit of future generations and provide young people with a basic understanding of financial products."

The Government has a dedicated website, www.childtrustfund.gov.uk.

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