Trust funds for everyone
This is sort of off-beat for polyscience.org, but I thought the social ramifications were worth investigating. In the UK, the British government has instituted a trust fund program for children (or their parents) to save money in. Currently the only restriction on this is the amount that can be saved per year: £1,200. The government gives parents a £250 voucher to parents to be saved for their child’s future. The funds can be saved, tax-free until the child’s 18th birthday.
The program seems so mind-bogglingly obvious that I’m surprised that no one had thought of it before now. I know many parents in the United States buy their children savings bonds for their first couple of birthdays, and I think such a program here in the US would be immensely popular, especially with grandparents. This new UK system is a bit more forward-thinking, I think. I would have used such a system when I was earning money as an early teenager. It was a game to see how much money I could save in my savings account (passbook savings accounts represent!), and a program like this would have been really cool. I could see kids competing to see who could rack up the most money. (Those with the givingest families would win, of course.)
The articles I’ve been able to find on the topic don’t go into much detail — there doesn’t seem to be any information on interest rates (if any) or what happens when the child turns 18: does he or she have to pay taxes on it? Is withdrawal mandatory?
Another issue is that a government system like this is also ripe for abuse. Witness Social Security in the US. Presumably, the government tracks how much money each child has accumulated, and will dole out what they owe on the child’s birthday. So what happens to the money in the meantime? Does the government use it for something else? The whole thing, while socially-progressive seems like a good way to give the government a nice fat loan.
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