Individuals born between September 1, 2002, and January 2, 2011, may be sitting on substantial savings without even knowing it. According to new figures from HM Revenue and Customs (HMRC), around £1.4 billion is locked away across approximately 728,000 Child Trust Funds (CTFs) waiting to be claimed. The average claimable amount is estimated to be around £2,200, but many young adults remain unaware of these financial assets.
The Child Trust Fund scheme, established by the Labour government, was aimed at providing every child born within the designated timeframe with long-term, tax-free savings. Typically, the scheme kickstarted with government contributions of at least £250 at birth, with the intention of allowing funds to grow through investments until the child turned 18. Upon reaching adulthood, individuals can access their savings, yet, many find themselves oblivious to the existence of these accounts.
Latonya Skye-Paterson's experience is one many can relate to. At just 20 years old, Latonya discovered her CTF only after her college tutor suggested she check online. “I found I had £955 in there, which is a lot. A lot more than I was expecting... it helped me so much,” she expressed. This increase illuminates the potential for savings growth as funds mature.
New calls are being made for automatic payouts to be initiated for these dormant accounts. Sir Geoffrey Clifton-Brown, MP and chair of the Public Accounts Committee, endorses the “default withdrawal at 21” plan. This initiative aims to release funds to beneficiaries automatically when they reach the age of 21 if they have not already made a claim. “I liken this money to a treasure trove buried on a desert island... expecting poor recipients on these child trust funds to go and find this money,” he commented, emphasizing the need for proactive measures from the government.
Many believe this move could relieve financial burdens for young adults facing the challenges of early adulthood, especially against the backdrop of rising living costs. Latonya noted, “Especially with the cost of living, getting it automatically when you didn’t know you had it could really give people the break they need.”
Campaigners also highlight the challenge many face when trying to reclaim their funds. The Share Foundation, which helps link young people with their unclaimed accounts, noted they have successfully connected over 65,000 individuals with their CTFs. They advise young adults to utilize the government’s online tool accessible via the GOV.UK website, which aids users in tracking down their accounts with just their National Insurance number and date of birth.
Angela MacDonald, HMRC’s Second Permanent Secretary, urges individuals to be mindful of their CTFs as many young adults are beginning their careers, attending university, or moving out. “Many 18-21 year olds are starting out... and their Child Trust Fund could make a real difference to their future plans,” she said, encouraging families to discuss these funds and the opportunity they represent.
While the CTF scheme officially closed to new accounts in 2011, HMRC continues to stress the importance of individuals claiming their funds. According to their statistics, around 42% of eligible 18-20-year-olds have not yet accessed their savings, attributed to what some perceive as failures on HMRC’s part to adequately inform account holders.
Dame Meg Hillier, chair of the Public Accounts Committee, noted the CTFs are meant to serve as financial kickstarts for young adults as they transition to independence. “While these accounts were touted as financial jump starts to adulthood, the scheme has not effectively achieved its ambition,” she lamented.
For those ready to claim their CTFs, individuals can contact their fund providers directly if they know who holds their account. If uncertainty looms, HMRC can assist with identifying fund holders. The process requires one to provide their National Insurance number, and appropriate details about the child’s identity, including names and addresses.
Despite the legitimate frustrations surrounding the claiming process, advocates encourage the use of HMRC and trusted organizations to avoid costly third-party services, which can take significant fees for tracing accounts. “It's easy and free to find out where your money is. Go to findCTF.sharefound.org or GOV.UK to locate it today,” Gavin Oldham from the Share Foundation stated, encouraging young adults to take action.
With £1.4 billion at stake, representing countless missed opportunities for young adults striving for financial independence, the call to action could not be clearer. The need for systemic reform and awareness is evident, and as Sir Geoffrey Clifton-Brown and advocates continue to push for change, the hope remains strong for individuals ready to reclaim their financial futures.