Asset Stripping: The End of the UK’s Child Trust Fund

At the very core of our work lays the idea that everyone deserves equal opportunity. From an assets perspective that means we need to take steps to expose all children to the benefits of assets in the household (and the “wealth effect” that accompanies those assets) beginning very early in life. That’s why we’ve championed the idea of a universal system of children’s savings accounts, specifically the ASPIRE Act, for years now.

This idea has had some traction in the United States, but nothing compared to the United Kingdom, where an actual universal system of children’s savings accounts was implemented several years ago. We’ve written frequently and at great length about the Child Trust Fund, and sponsored others to do so as well. Unfortunately, the Cameron government canceled the CTF shortly after taking office.

From our perspective, the CTF (and a separate savings incentive program called the Savings Gateway) were at the very least a remarkable experiment. We expected to learn a great deal from the CTF. Unfortunately we won’t get to watch the full course of what may have been in the UK. The good news is that there is a large cohort of children who will continue to own their CTF accounts for the rest of their lives. There will be ample opportunity to study the “wealth effects” within that group. There are also many lessons to be drawn from the CTF to date. Our friends at the Institute for Public Policy Research have a new paper out that examines that experience, what went right, what went wrong, and what the future holds.

Asset Stripping: Child Trust Funds and the Demise of the Assets Agenda isn’t all sunshine and roses, but it’s a must read for us and for others interested in children’s savings accounts, the promise of assets, and promoting equality of opportunity.