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Almost a million young adults entitled to unclaimed Child Trust Funds worth £1.7bn

26 July 2023

  • Barriers in accessing funds for children and young people lacking mental capacity as money fails to reach many it was designed to help
  • Providers earning up to £100m a year in profit off savings mostly composed of Government money – with some not doing enough to link the funds with their owners

Over £1.7bn is sitting waiting to be claimed by almost a million young adults, at an average value of approximately £1,900 each. In a report published today on Child Trust Funds (CTFs), the Public Accounts Committee (PAC) finds that the amount potentially sitting unclaimed in matured 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. 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. Given CTFs are not reaching many of the people they were designed to help, 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. As around 887,000 CTFs, or half of all accounts, were for children in low-income families, it is likely that much of the unclaimed money belongs to young people from low-income backgrounds, 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 such 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. Providers could be collectively earning up to £100 million per year through charges on Child Trust Funds. The PAC’s inquiry heard these charges are very high indeed for fund management, though HMRC claims the charges are less than the annual growth of these investments.

Chair's comments

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.”

Further information

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