£1bn+ Still Sitting in Unclaimed Child Trust Funds

Coins and a glass jar

Over £1bn remains unclaimed in Child Trust Funds belonging to young people who have turned 18 since September 2020, a new analysis has revealed.

The Tracing Group has been working with The Share Foundation to help young people track down their lost Child Trust Funds for more than 12 months via the CTF Register.

“We are working hard to reunite our young people with their lost savings through the CTF Register, but the new data from The Investing and Saving Alliance shows that we still have a long way to go,” explains Danielle Higgins, Managing Director of The Tracing Group. Statistics published by The Investing and Saving Alliance (TISA) reveal that 716,000 unclaimed accounts hold an average of £1600 in each, adding up to £1.1bn in total.

Child Trust Funds (CTFs) were created by the Government in 2002, giving children born between September 1 2002 and January 2, 2011, the choice of a tax-free savings or investment account that was boosted by government vouchers of £250 or £500 for those from lower-income families.

The idea was that the Child Trust Funds would encourage parents to save regularly for when their child turned 18.

Whilst many parents took up the offer, the young people that the funds were destined for have become disconnected from their nest egg for one reason or another.

Around 6.3 million CTFs were opened in total, of which some 1.8 million were set up by HMRC when parents failed to initiate the account set up.

The first teenagers to get access to their funds began turning 18 in September 2020 and can now access their accounts.

But still as many as 716,000 CTFs out of the 1,524,000 that matured between September 1, 2020 and June 30, 2022 have gone unclaimed, according to TISA.

Why are accounts being left dormant?

The high proportion of dormant accounts suggests the Government and providers have failed to raise awareness of CTFs.

There are several reasons people have forgotten about their CTFs, including a lack of communication from the Government.

Although providers write to teens before their 18th birthday at their last known address, many families have since moved on, meaning they will not have received a reminder.

In the letter the Government sends out to teenagers on their 16th birthday about their national insurance number, there is only one line of information stating they are old enough to take control of their fund.

Cost of living crisis could spark interest in the funds

“For many lower income families, these forgotten windfalls couldn’t come at a better time – the cost of living crisis means so many parents are struggling financially and the payout could provide their child with support they need for education, a car or rent for example,” suggests Danielle.

And for those looking to capitalise on the funds, it is not too late for parents with younger children to take back control of their CTF money and make it work harder.

There are around 4.6 million children aged between 11 and a half and 17 with CTF cash, giving parents of the youngest children up to six and a half years to make a difference.

Even though the CTF scheme has now ended, parents can still add up to £9,000 a year to an existing CTF account.

There’s no tax to pay on the Child Trust Fund income or any profit it makes and it will not affect any benefits or tax credits caregivers receive.

How to find a Child Trust Fund

The Share Foundation, a charity working to reunite teenagers with their cash, offers a free online tracing service through the CTF Register in conjunction with The Tracing Group and hosts webinars for parents, teachers and teens.

Gavin Oldham, chairman of the foundation, said: “Our register is the most up-to-date and can find a young person’s CTF within hours compared to the more clunky government gateway scheme that can take weeks.”

Teens are also learning how to find their CTFs thanks to social media and friends.

Care worker Katie Morgan found out about her account when she saw an advert for the Share Foundation on Instagram.

The 17-year-old who lives in Kettering, Northamptonshire, was thrilled to discover she had £800 and plans to use it to buy a secondhand car.

“I need one for work. It would take me ages otherwise as I only manage to save £100 a month after paying my rent, bills and driving lessons. I’ve been telling my friends – none of us had heard of Child Trust Funds.”

Meanwhile, teenagers are also finding out about accounts from the dozens of TikTok videos that have appeared on the app of other well-meaning teens explaining the basics of CTFs. In some cases the videos have been viewed hundreds of thousands of times.

Awatif Masoud’s TikTok video, that was posted in April last year, was viewed 668,000 times and received 179,000 likes and almost 5,000 comments.

The now-19-year-old from East London created the video after being shocked by a letter she received on her birthday from her provider, One Family, informing her she had £1,500.

She said: “I just thought: ‘If I didn’t know about this, then how many others don’t know?’ I ended up staying up all night to respond to each comment as so many thought it was a scam!

“My fingers hurt so much but I wanted each person to know what Child Trust Funds are about. I reached all sorts of people – even parents – and told them to go to the Government website.”

For further help with tracing your lost Child Trust Fund use the free CTF Register.