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Young people missing out with £1.7bn sitting in unclaimed Child Trust Funds

Written by: Emma Lunn
Affected young people could be owed £1,900 each, while Child Trust Fund (CTF) providers have been accused of not doing enough to link the funds with their owners.

The Public Accounts Committee said there are barriers in accessing funds for children and young people lacking mental capacity, with money failing to reach many people it was designed to help.

In a report published today the committee found that the amount potentially sitting unclaimed in matured CTF accounts is 50 times that raised by the BBC’s Children in Need appeal in 2022.

CTFs are tax-free savings accounts set up for all eligible children in the UK who were born between 1 September 2002 and 2 January 2011.

But following a failure in long-term planning by HMRC, which set up the accounts, an estimated 42% of 18-to-20-year-olds have not claimed the savings in their matured accounts.

The committee – and other industry experts – said that HMRC should be doing more to find and contact young people who have not claimed their savings.

It is likely that many account-holders may not know about their savings or have lost track of them. About 887,000 CTFs, or half of all accounts, were for children in low-income families, those who need it most.

CTFs are also not easily accessible for the families and carers of children and young people lacking mental capacity. While up to 126,000 of these young people must have a family or carer apply for legal authority to access and manage these funds on their behalf, the Court of Protection (covering England and Wales) approved only 15 applications during 2021.

The report also finds that while providers are charging fees for passively managing CTFs, many are not doing enough to link up forgotten accounts with their owners.

Only four providers, out of around 55 in total, have proactively and voluntarily worked with the Tracing Group, a commercial service for tracing the owners of dormant accounts.

‘Young people need all the support we can give them’

Dame Meg Hillier MP, chair of the committee, said: “The aims behind Child Trust Funds are laudable – for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits. But many young people are unaware that they have money waiting to be claimed. Schemes like these need careful planning so that they are not forgotten at the point when they mature.

“Our inquiry heard a world of difference can be made to care leavers in particular, with funds acting as a jump-start into adult life. In an ongoing cost-of-living crisis, our young people need every bit of support we can give them. HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be.”

Andy Russell, CEO of Wealthify, said: “Never has there been a better time to engage young people in the importance of financial choices, so it’s concerning that nearly a million CTF accounts lay unclaimed, and those eligible are struggling to access the funds, including those who need the money most.”

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