Proposals by the Conservatives to limit Child Trust Funds (CTFs) to the poorest families have not been welcomed by parents, Family Investments has revealed.

Research by the Child Trust Fund provider has found that eight out of 10 parents do not support the plans announced by shadow chancellor George Osborne earlier this month.

According to the findings, 96 per cent of parents believe that the Child Trust Fund is a ‘good thing’, with many admitting that it had encouraged them to save for their children’s future.  

Launched in 2002, the Child Trust Fund can be opened by family and friends, and is designed to provide a sizeable fund which can be withdrawn when the child turns 18.

Under the new proposals by the Tories, a family with a total household income of more than £16,040 will not be eligible to open a Child Trust Fund, which the party estimates will save £300million a year, although the Institute for Fiscal Studies has put this figure closer to £225million.

Commenting, John Reeve, chief executive at Family Investments said: “The CTF has a lot of support from parents who do not want to see the scheme changed.

“More than 80 per cent still believe that all newborn children should remain eligible for the CTF, rather than restricting the vehicle to parents with a household income of £16,040 or less. If the Conservative’s plans were implemented it would mean that children whose parents were on minimum wage would not qualify for the CTF.”

Mr Reeve claims that low and middle income families will be “really hit” by these spending cuts.

“These are exactly the kind of families who may want to save for their children’s future but need the help and encouragement to do so. To get rid of the CTF before the long-term benefits have been realised seems very strange,” he said.

© Fair Investment Company Ltd