Copyright maltatoday
A Nationalist government will introduce what is being labelled as a Child Trust Fund for every child born to Maltese residents, Alex Borg announced on Monday. The flagship proposal, complete with a detailed policy document explaining how it will work, was unveiled by the Nationalist Party leader during his budget reaction speech in parliament. The scheme will see the government invest an initial capital endowment at birth of €5,000 with parents and guardians having the option of making further voluntary contributions. The aim of the scheme is to establish a long-term savings and investment plan. The policy document states that the objective of the trust fund will be to ensure “equitable financial opportunity, promoting financial literacy, and supporting youth empowerment upon adulthood”. The CTF will not replace child support benefits like Children’s Allowance but will be a new benefit. “By allocating a financial endowment at birth, the state is not merely offering a one-time benefit but rather establishing a platform for future opportunity—enabling children to pursue education, innovation and independence once they reach adulthood,” the policy document reads. The eligible beneficiaries will be all children born in Malta on or after the scheme becomes effective and whose parents or legal guardians are Maltese citizens or hold permanent residence status at the time of the child’s birth. The child and at least one parent must be ordinarily resident and continuously present in Malta for a minimum period of 60 consecutive months prior to registration. The state will deposit €5,000 in a fund within 90 days of the child’s birth. The money accrued over time will be ring-fenced and can only be withdrawn when the child reaches 20 years of age. Parents, guardians and relatives can make optional voluntary contributions. The funds will be managed by a National Child Trust Fund Authority and supervised by the finance ministry with investments following a low-risk, ethical and sustainable portfolios. The PN policy document states that upon reaching 20, the beneficiary may access the fund and use its proceeds for education purposes—to support post-graduate studies; entrepreneurship—to be used as seed funding for a registered business or start-up; and housing—to be used as a down payment on a first residence in Malta and Gozo. The CTF will allow partial withdrawals in exceptional cases for severe medical and disability-related needs. The policy document states that the scheme will be financed through a dedicated recurrent line item in the annual budget with an estimated annual cost of approximately €22 million, based on an average of 4,000 to 4,500 births per year. Projections provided by the PN show that by year 20, the number of children who would have an account in their name under the scheme would reach 88,000 with state investments totalling €440 million. The cumulative fund value is projected to reach €655 million by then. Workings show that at a conservative 2% annual return, the value of a policy when a child reaches 20 would have grown to around €7,430 if only the government contribution is taken into account. If parents would have contributed a further €500 annually, the same conservative workings show a yield of €20,570 after 20 years.
