Call for Child Trust Fund change

By Bob Howard
BBC Radio 4's Money Box

CTF money can be accessed by children when they reach 18

Child Trust Funds of children with severe disabilities should be ringfenced so they do not affect future claims for benefits, says Mencap.

Every child has at least £250 paid into their fund by the government and if relatives contribute it could reach tens of thousands of pounds when the child reaches 18.

But residential care and some benefits are currently means-tested, so there are concerns anyone with substantial savings may not be eligible or get less money.

That could mean vulnerable people lose out, says Mencap.

Dr Garth Lancaster from Northamptonshire has been trying to plan financial support for his six-year-old granddaughter, Tiegan, who has severe cerebral palsy.
Her year was the second to benefit from the setting up of Child Trust Funds which were introduced from 1 September 2002.

If she's in the care of the local authority, will they take all the money? Dr Garth Lancaster

Dr Lancaster and his family were hoping if they regularly contributed to Tiegan's fund it would be worth tens of thousands of pounds by the time she reached 18.

But he is worried that means-testing could mean that having too much money in the pot could exclude her from some government help, possibly for years, as he told BBC Radio 4's Money Box programme.

"If she's in the care of the local authority, will they take all the money? If she is still at home, will the government stop her getting Disability Living Allowance until the money is used up?," he said.

At the moment, disability benefits are not means-tested so if that does not change, Dr Lancaster's granddaughter would still be able to claim even if she has a large amount of savings when she reaches 18.

However, some residential care is means-tested, and so are other benefits that many people with other disabilities claim such as income support and housing benefit.

Currently, anyone who has savings of more than £16,000 cannot claim these benefits and those with between £6,000 and £16,000 will receive less than the full amount according to a sliding scale.

Safeguarding savings

Dr Lancaster's concerns are shared by the charity Cerebra, which supports children with brain injuries.

Cerebra's Alex Elsaesser said parents are worried about seeing money they have saved being taken by the state.

"I don't think that's what the relatives or grandparents put this money aside for when they're thinking of helping their children," he said.

Aarti Puri, the in-house lawyer for the charity Mencap, said setting up a discretionary trust is one way parents can safeguard savings for their children.

However, she believes there is a simple way that government departments could work together to reassure parents worried about saving with Child Trust Funds.

"They could technically exclude any funds that are saved in a Child Trust Fund for a child with a learning disability once they get to 18. That would be a very positive step forward if they decided to do that," she said.

However, the government has said it is not considering this option at the moment.

A spokesperson for the Department for Work and Pensions which administers benefits said: "The government is not currently considering amending the capital limits of our means-tested benefits for disabled people.

"Our disability benefits, like Disability Living Allowance, are not means-tested and provide valuable support to those who need it most."

HM Revenue and Customs, which administers Child Trust Funds, said it is critical of any attempts to second-guess how benefits will work in the future: "The first Child Trust Funds will not pay out until 2020. It's not helpful to guess as to what rules will apply over a decade from now to possible benefit claims."

BBC Radio 4's Money Box was broadcast on Saturday 18 June at 1204 BST.