- £10 billion is sitting in Child Trust Fund (CTF) accounts, with each account worth £2,212 on average
- CTFs were set up under the last Labour government and discontinued in 2011
- £1.4 billion of this is in accounts that have matured but not been claimed
- More than a quarter of CTF accounts were set up by the government, rather than parents
- £100 million a year being taken in charges by providers
- If you’re aged between 18 and 22 you can check for lost accounts online
Charlene Young, pensions and savings expert at AJ Bell, comments on a plea from HMRC urging young people to find their CTFs:
“Government has today urged people aged 18-22 to come forward and claim their share of £1.4 billion stashed in matured Child Trust Funds (CTFs). Following the release of annual figures last week, we know that around £10 billion is sat in CTF accounts, with £1.4 billion in unclaimed accounts and £7.5 billion in accounts still held by under 18s (see table).
“The government plea highlights the magnitude of the problem of ‘continuing CTFs’ – where a child has turned 18 but their funds go unclaimed. Over half of the money in these accounts – £776 million – matured over a year ago.
“Many parents and children aren’t aware they even have the account, or don’t know who the money is with or how to track it down. As highlighted by a Public Accounts Committee report published last year, many CTF providers are charging huge sums for managing the accounts, eating into the money. The report indicates many accounts are charging 1.5% annually for a portfolio of passive funds, whereas a JISA on a modern platform might cost around 0.25%, plus the cost of a tracker, which can be as little as a few basis points
“More than a quarter of CTF accounts were set up by the government because parents failed to do so within the 12-month window. This highlights why so many are unclaimed – as the parents either weren’t aware or won’t remember that an account was even set up for their child, let alone where the money is now.
“Any child born between 1 September 2002 and 2 January 2011 who hasn’t already got details of their account should track it down. You can go to the online tool at gov.uk and fill in a form to trace the money, using your national insurance number and date of birth.
“Once you’ve tracked down the money you can choose what to do with it. Your options are to transfer it to an adult ISA or withdraw the money. Until then your money will just sit in an account that no one else has access to, possibly paying very high charges. Anything you transfer to an adult ISA at maturity will not count towards your annual ISA allowance, which is £20,000 for over 18s.
“For many young people who have CTFs but are still under 18, it will make sense to transfer it to a Junior ISA, where the charges will likely be lower, and you’ll have a much bigger investment choice. The money will still be locked up until you turn 18, but the tax-free benefits of ISA investing still apply. You can transfer the entire CTF into a Junior ISA and still add up to £9,000 to it in the same tax year.”
