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By Sally Priestley - 23rd November 2005
A tiered system of top-ups for child trusts funds, with poorer families receiving more, ensures that the money goes where it is needed most
Dominic Maxwell, author of the IPPR report
The government should introduce a system of top-ups for child trust funds to assist the least well off, according to a new report from a leading think tank.
The Institute for Public Policy Research (IPPR) argues that top-ups should be divided into three tiers, based on parental income, with those on lower incomes getting a bigger contribution as they get older.
It says the top-ups would be more focused on children whose parents can’t afford to add to their accounts.
Suggested top-up amounts for children aged seven are from £200 (for households with an annual gross income of over £26,800 a year) to £650 (for households with an annual gross income of less than £17,600).
Graded support
And for children aged 12 the IPPR suggests a £150 top-up for the highest income families and £800 for the lowest income families.
The report claims that tiered top-ups would cost the same as the current system which provides £250/£500 at each age group.
And it would mean that when child trust funds are collected at 18, the poorest children could expect to receive at least £2,860, the next poorest £2,270, and those from the wealthiest families £950, plus any savings from parents.
The report's author, Dominic Maxwell, said: "Child trust funds widen opportunities - they can be used to support education, put a deposit down to rent a flat, or provide a buffer for a rainy day.
"A tiered system of top-ups for child trusts funds, with poorer families receiving more, ensures that the money goes where it is needed most.
And he added: "Without this some children could be left behind. Children from low-income families tend to need assets more, but have less access to them.
"Refocusing top-ups as children get older will make sure that every child enters adulthood with enough money to really make a difference."
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