Child Trust Funds: 700,000 accounts forgotten about or lost
Child Trust Funds
Child Trust Funds (CTF) were introduced in September 2002 as a means for investing in children’s futures. At birth, every child living in the UK (not subject to immigration controls) was provided with a voucher worth £250 by the government to open a Trust Fund account; a further £250 was given to children from low-income families. At age 7, the government then made an additional payment of £250 into the account, with another £250 given to low-income children. The scheme was open to all parents and guardians of children born between 1st September 2002 and 2nd January 2011 when the scheme was replaced by ‘Junior ISAs’.
Until the age of eighteen, each CTF account is locked, although children can manage their account from the age of sixteen. This year, from 1st September, the first wave of CTF owners will be able to access their accounts and withdraw available funds.
The amount of money available in CTF accounts is dependent on four things. Firstly, the income of the parent or guardian when the CTF was first set up. Secondly, if any additional funds were added by the government or by a parent or guardian. Thirdly, if the account was altered to a Junior ISA. Finally, the type of account opened on behalf of the child; these could range from a traditional savings account, to ‘stakeholder’ and ‘share based investment’ accounts. Crucially, even if no money was added to the account by the parent or guardian, there could still be between £250 and £1000 in the Child Trust Fund.
"HMRC has estimated that there are around 700,000 accounts which have been forgotten about or ‘lost’"
Around 76 percent of children born in the UK between 1st September 2002 and 2nd January 2011 have a CTF. However, HMRC has estimated that there are around 700,000 accounts which have been forgotten about or ‘lost’. For those who were from a low-income family when the scheme was launched, there is a 1 in 6 chance that their parents have forgotten about their Child Trust Fund and there could now be over £1,600 in the account. In total, unclaimed money amounts to around £2.5 billion.
Just Finance Foundation
In order to spread awareness about Child Trust Funds, a recent campaign has been launched by the Just Finance Foundation. The Just Finance Foundation is a UK charity which aims to address issues of financial exclusion, debt and money induced distress, and the lack of widespread knowledge around budgeting, saving and spending. The Just Finance Foundation works with a range of partners and funders, locally and nationally.
The Just Finance Foundation also aims to increase the supply of fair and affordable finance and financial services, particularly for low-income households. In addition, it sets out to equip future generations to manage their money wisely. Thus, spreading awareness about the availability of Child Trust Funds to a generation of young British people, is a fundamental part of its work.
"Finding a Child Trust Fund is very easy and free to access via the UK government’s website"
Finding a Child Trust Fund is very easy and free to access via the UK government’s website; in order to access the CTF locater tool, the child or parent/guardian will need a Government Gateway ID (if you do not have one these are quick and easy to create, all you need is your National Insurance number and further details that demonstrate identity e.g. a UK Passport, Driving Licence, a recent payslip, or a P60 form). Government page to find if one has a CTF can be accessed on the link below:
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Once signed in to Government Gateway, the user will be asked if they are the parent/guardian of the child, or the CTF account holder. If you are a parent or guardian, you will be asked for the name and date of birth of the trust fund account holder in order to request information on the CTF. After submitting the request, a response advising where the Child Trust Fund is located will be sent within 15 days.
After the identity of the CTF provider (normally a bank or building society), the CTF account holder will need to contact the provider directly in order to update their contact information; telephone details of all CTF providers can be found online. The full list of account providers is available online via the government’s website. Telephone details of CTF providers can be found online.
The final step advised by the Just Finance Foundation is for the CTF account holder to decide what they are going to do with the trust fund. In order to help young people plan for the future and encourage sound financial investments, the Just Finance Foundation has created an informative ‘Fund My Future’ quiz which offers tailored advice for where to invest and save the money acquired through the CTF. The link for the quiz is available here.