What is a Child Trust Fund?

Under the scheme, children born after September 1, 2002, receives a nest-egg from the Government.

Each child's trust fund is established with a Government donation of £250, or £500 for the poorest families who have a family income of less than £13,480 a year. Children who qualify for the scheme receive an extra £250 when they reach the age of seven, with the poorest children getting an extra £500.

Parents and grandparents are allowed to invest up to £1,200 a year in each trust and no tax is charged on the income earned.

Who and what is it for?

The plan is designed to instil a savings ethic in youngsters and to improve their financial knowledge. Children will not be able to withdraw the money until they reach 18.

Mr Brown has also said that the scheme is designed to spread the benefits of assets ownership.

Is the scheme fair?

The scheme's fairness is debatable. There are two groups who could be said to have been treated harshly by it.

First, the plans were so long in gestation they were backdated to 2002, but parents of children born just before September 2002 may well feel that they and their offspring are being hard done by.

Second, although the children of poorer families will receive more money from the Government at the outset, it is unlikely that poor parents will be able to afford to put additional money into their children's funds each year.

How do I get the funds?

You should receive a voucher for your Child Trust Fund as soon as you start to claim Child Benefit. For more information, visit www.childtrustfund.gov.uk

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