Thousands of young adults across Merseyside are being encouraged to check if they are owed a significant sum of money from a government savings scheme. An estimated £1.5 billion remains unclaimed in Child Trust Funds (CTFs), with an average payout of £2,240 per person.
The accounts were set up for children born between September 1, 2002, and January 2, 2011. Many beneficiaries, who are now adults, may be unaware the savings accounts exist. A local campaign has been launched to help residents find and claim their money.
Key Takeaways
- A total of £1.5 billion is currently unclaimed in Child Trust Funds across the UK.
- Approximately 758,000 young adults have not yet accessed their accounts.
- The average value of an unclaimed fund is £2,240.
- Individuals born between September 1, 2002, and January 2, 2011, are eligible.
- Knowsley MP Anneliese Midgley has launched a local campaign to raise awareness.
Understanding Child Trust Funds
Child Trust Funds were a government initiative designed to provide a financial head start for young people. The scheme automatically created a long-term, tax-free savings account for every eligible child born within the specified dates.
The government made an initial deposit of at least £250 into each account. Families on lower incomes, or children in the care of a local authority, received a higher initial payment of £500. A second government contribution was often made when the child turned seven.
What Was the Purpose of the Scheme?
The Child Trust Fund scheme, introduced by the Labour government in 2002, aimed to ensure every child had some savings by the time they reached adulthood. It was also intended to encourage saving habits among families, who could contribute additional funds to the accounts over the years.
Parents and guardians were given a voucher to open a CTF account with an approved provider, such as a bank or building society. However, if no action was taken within a year, HM Revenue and Customs (HMRC) automatically opened an account on the child's behalf. This is a key reason why many funds are now considered 'lost'.
Why Are So Many Funds Unclaimed?
A significant number of the unclaimed accounts are those that were automatically set up by HMRC. It is estimated that around 500,000 of these 'default' accounts were created, and many families were never aware of their existence.
Over time, families may have moved house without updating their address with the CTF provider, leading to lost contact and forgotten paperwork. For children in the care system, tracking these accounts can be particularly challenging as their circumstances change.
Unclaimed Funds by the Numbers
- 758,000: The approximate number of young adults who have not yet claimed their CTF.
- 500,000: The number of 'default' accounts set up by HMRC when parents did not open one.
- 50%: The proportion of these default accounts that belong to children from lower-income households.
The first group of CTF beneficiaries turned 18 in September 2020, gaining the legal right to access their money. Each year, another cohort of young people reaches this milestone. According to HMRC, over 670,000 individuals who are now old enough to claim their funds have yet to do so.
Local Campaign Launched in Knowsley
To address this issue in Merseyside, Anneliese Midgley, the Member of Parliament for Knowsley, has launched a campaign to encourage local families to search for their lost funds. The campaign aims to reunite young people with money that rightfully belongs to them.
Ms. Midgley highlighted the origins and importance of the scheme in her call to action for local residents.
“Child Trust Funds were set up by the last Labour government to give every child a fair start and a bit of security for the future. But £1.5bn of that money is still unclaimed and some of it could be yours.”
The campaign urges people in Knowsley and the wider Merseyside area to take a few minutes to check for a lost account. The goal is to ensure the money benefits the local community as intended.
“I want everyone in Knowsley to get what they’re entitled to,” Ms. Midgley added. “So I’m launching this campaign to encourage people to take a few minutes to check, claim what’s yours, and make sure that money goes where it belongs: back into local families’ pockets.”
How to Find and Access Your Fund
Finding a lost Child Trust Fund is a straightforward process that can be done for free. Young people are advised not to use third-party claims management companies, which often charge a fee or take a percentage of the final amount.
The official and most direct way to locate a CTF is through the government's own service.
Steps to Locate Your CTF:
- Use the HMRC Tool: The easiest way to start is by using the free tracking tool on the GOV.UK website. You will need to log in using a Government Gateway ID.
- Provide Your Details: You will be asked for personal information, such as your name, address, date of birth, and National Insurance number.
- Receive Provider Information: Once your identity is confirmed, HMRC will provide the name of the bank or building society holding your Child Trust Fund.
- Contact the Provider: With this information, you can contact the provider directly to access your account and claim the funds.
It is important to have your National Insurance number to hand, which you typically receive just before your 16th birthday.
Managing Your Fund After Turning 18
Once a young person turns 16, they can legally take control of their Child Trust Fund, meaning they can make decisions about how it is managed and invested. However, the money cannot be withdrawn until they turn 18.
Upon reaching their 18th birthday, the beneficiary has several options:
- Withdraw the full amount: The money can be taken out as a cash lump sum.
- Transfer to an ISA: The funds can be moved into an adult Individual Savings Account (ISA) to continue growing tax-free.
- A combination of both: Part of the money can be withdrawn, and the rest can be transferred to an ISA.
Financial experts often recommend considering transferring the funds to an ISA to benefit from long-term, tax-efficient growth. The money remains in the CTF account, continuing to accrue interest or investment returns, until the owner claims it.