Asset Building Financial Inclusion Working Paper

The Child Trust Fund in the UK: Policy Challenges and Potential Responses

The United Kingdom introduced the Child Trust Fund (CTF) policy, a children’s savings policy, in 2002. A focus group study conducted on parental attitudes to the CTF (Prabhakar, 2006, 2007) identified main reasons why CTF accounts were left unopened. This paper explores different ways that non-opening of accounts might be reduced. One strategy draws upon recent developments in behavioral economics and points to different ways that the CTF may be designed. An alternative strategy emphasizes the role of financial education of parents as a way of addressing their concerns and increasing the opening rates of these accounts. The paper also considers another issue raised during the focus groups, namely parental unhappiness with the treatment of older siblings denied a CTF. This is part of a broader concern about the additional help that may be needed for children from particular backgrounds.

This paper was presented during Child Development Accounts: Research and Policy Symposium, a November 2008 conference, and was developed for publication in Child Development Accounts: Theory, Evidence, and Policy Potential, a special issue of Children and Youth Services Review. Released in November 2010, the special issue was edited by Michael Sharraden, Youngmi Kim, and Vernon Loke.

Subsequent publication: Prabhakar, R. (2010). The Child Trust Fund in the UK: How might opening rates by parents be increased? Children & Youth Services Review, 32(11), 1544–1547. doi:10.1016/j.childyouth.2010.03.016

Project: Global Assets Project


Prabhakar, R. (2009). The Child Trust Fund in the UK: Policy challenges and potential responses (CSD Working Paper No. 09-56). St. Louis, MO: Washington University, Center for Social Development.