Hundreds of millions of pounds in Child Trust Funds (CTFs) set up by the government between 2005 and 2011 to help young people financially at the start of their adult lives has not yet been claimed, according to this report by the National Audit Office (NAO).
A CTF is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011, which they can access when they turn 18. The government paid more than £2 billion into CTFs for 6.3 million children born during this period. Most children received around £250 each from the government at the time their CTF was started, while those from low-income families or in local authority care received an additional £250.
Most CTFs were invested in stocks and shares, with the total market value of CTFs standing at £10.5 billion at April 2021, an average of £1,911 per CTF. Of the £10.5 billion, £0.8 billion belonged to young people aged 18 or over who could claim their CTF. Of the £0.8 billion, an NAO investigation found that 145,000 18-year-olds had not claimed a total of £394 million by April 2021, while 175,000 18-year-olds had either withdrawn or reinvested a total of £376 million from their CTF accounts.
The NAO found that CTFs are at risk of becoming forgotten or lost track of by the account holder. As more young people with a CTF turn 18, an increasing number can access their accounts. However, latest estimates indicate that more than a quarter of CTFs have remained untouched for a year or more after their owners turned 18.
It is unclear how many children and young adults are either unaware of, or unable to locate, their CTF. A 2019 YouGov survey of parents of children aged 8 to 16 revealed that one in six parents were unaware of the CTF scheme. HMRC set up 1.7 million CTFs - 28% of all accounts - after parents did not do so within the required 12-month time period using vouchers sent to them by HMRC, meaning the child's family had little engagement with the scheme from the outset. Children from low-income families were more likely to have their CTFs set up by HMRC than children from wealthier families1.