Children’s trust funds ‘at risk of being forgotten by their account holders’
Hundreds of millions of pounds in children’s foundations (CTFs) to provide financial support to young people in early adulthood have yet to be claimed, according to a spending watch.
The National Audit Office (NAO) has expressed concerns that accounts are at risk of being forgotten or lost track of by their holders.
It is estimated that more than a quarter of CTFs remained untouched for a year or more after their owners turned 18.
A CTF is a long-term tax-free savings account for children born between September 1, 2002 and January 2, 2011 that they can access when they turn 18.
The Government paid more than £2 billion into CTFs for the 6.3 million children born during this period. Most children received around £250 each from the government at the start of their CTF, while children from low-income families or in community care received an additional £250.
At a time of economic hardship for millions of people across the country, it is important that the government does enough to ensure young people know about and have access to their children’s trust funds
Many CTFs have been invested in equities and shares, with the total market value of CTFs being £10.5bn as of April 2021.
Some of these belonged to young people aged 18 and over who had not unlocked their accounts.
As of April 2021, around 320,000 CTFs had matured in the seven months since the first CTF account holders turned 18 in September 2020.
Of these, 175,000 (55%) were claimed by the account holders and the accounts were closed, and 145,000 remained unclaimed.
Around £394million remained to be claimed in mature CTFs owned by young adults aged 18 and over as of April 2021, the NAO said.
It’s unclear how many children and young adults either don’t know or can’t find their CTF, the NAO said.
It added that HM Revenue and Customs (HMRC) intends to include CTFs in a communications campaign in 2023.
The NAO estimated that CTF providers – including banks and building societies – could collectively make up to £100m a year from account fees.
Gareth Davies, head of the NAO, said: “At a time of economic hardship for millions of people across the country, it is important that the government does enough to ensure young people know about and have access to their children’s trust funds . ”
Public Accounts Committee chair Meg Hillier said there was a need to be proactive in helping people get their funds back together, adding that in a cost-of-living crisis, money “could be a vital lifeline for young people, especially.” for people with low income backgrounds”.
https://www.standard.co.uk/business/money/child-trust-funds-at-risk-of-being-forgotten-by-their-account-holders-b1067026.html Children’s trust funds ‘at risk of being forgotten by their account holders’
