Child Savings Accounts - Caguas, Puerto Rico

A Global Assets Project Initiative

Caguas, one of the largest cities in Puerto Rico, in 2008 began offering vouchers as part of a universal Children Savings Account (CSA) policy that gives all children born to residents of the city a US$250 voucher that they can use to open a CSA at a private financial institution. The policy is partly the result of efforts made by Center for the New Economy and Global Assets Project co-directors Michael Sherraden and Ray Boshara.

Caguas plans to supplement this US$250 seed with an amount, to be determined, probably when recipients finish sixth grade. according to the Center for the New Economy, which provided technical assistance to the city of Caguas. Access to the funds in the account will be restricted until accountholders turn 18 years old, at which time they can access the funds in order to fund higher or vocational education, or open a small business.

While income on the accounts will be taxable, there will be no limits or caps. Also, Caguas has agreed to integrate financial education of children with the CSA policy.

For an example of press coverage of the initiative, please see El Nuevo Dia's coverage.