BLOG: Connect kids with lost Child Trust Funds to prepare them for future financial challenges
Gavin Oldham OBE, founder of The Share Centre, talks about the wider societal benefits of reuniting young people with their lost Child Trust Funds.
The Child Trust Fund was the centrepiece of Gordon Brown’s plan to encourage asset-based welfare. His objective was to establish a savings habit among children, providing a cushion of financial assets as they embark on adult life and enabling them to be confident in the management of their finances.
It was a hugely ambitious plan as a result of which over six million young people now own these largely Government-funded accounts.
When the Coalition Government stopped contributing in 2011, the accounts remained active, with increases in their value resulting from a combination of market growth and, for some, family contributions. These fortunate teenagers already own their accounts, although huge numbers don’t know it. It is one of the biggest opportunities, and challenges, in the field of personal finance today. It also begs the question: where is financial awareness in today’s GCSE curriculum?
One million children and young people in families in receipt of Child Tax Credit (the poorest 17% of UK families) are at risk of missing out on an average £1,500 each. This £1.5bn is held in lost Child Trust Funds, a huge number of which are ‘addressee gone away’ or forgotten by their families.
We estimate there are a further one million accounts worth an average of £1,000 each which are similarly lost to other children across the country.
In total, that’s an estimated two million accounts valued at around. £2.5bn, out of the total of six million Child Trust Funds in issue for almost all 8‐16 year olds born in the UK.
This is a colossal scheme. The accounts are safe and administered by a range of regulated account providers: but masses of them are effectively lost to the young people to whom they belong.
Meanwhile the oldest recipients enter their last year before adulthood on 1 September this year, and that’s why the Government has published draft regulations for consultation which include preparations for dormancy where no instructions have been given.
It is therefore vital to wake up the Child Trust Fund right across the United Kingdom, and The Share Foundation has been working on a plan to do that.
We’ve worked with HMRC to make the process of finding a Child Trust Fund easier. Not only do we provide a landing page as an easy route into the Government Gateway facility, but in coordination with HMRC we’re considering whether a simplified ‘Subject Access Request’ can be developed to help young people from disadvantaged backgrounds to find their accounts.
In January, The Share Foundation launched a new CTF Ambassador programme to recruit volunteers to increase awareness. The goal is for people who are motivated by a common interest to help young people to be better prepared for the financial challenges of adult life, to step forward and become a CTF ambassador.
Unless young people connect with their CTF and, if missing, find their accounts swiftly, its impact will be lost – which is why we are working to wake it up. Please help us do this, for the sake of the next generation!