Almost a million young adults entitled to unclaimed Child Trust Funds worth £1.7bn
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.
The Child Trust Fund scheme, set up as a financial safety net for 12 to 20-year-olds, appears to be largely forgotten.
With a significant portion of the funds remaining unclaimed, financial institutions are left as the only beneficiaries.
The initial aim of the government’s £2 billion investment into the scheme was to foster financial literacy and cultivate good savings habits amongst young people.
However, it is evident that this objective has fallen short of expectations, with large amounts still unclaimed.
“The Child Trust Funds can greatly help young people, particularly those from less wealthy backgrounds”, said The Share Foundation, pointing out the potential advantages that remain unrealised due to the unclaimed nature of these funds.
HMRC, although successful in launching the scheme, has since been criticised for its lack of long-term planning and coordination.
Detractors argue that HMRC’s failure to promote the scheme’s wider objectives has resulted in less than optimal benefits from the government’s £2 billion investment.
The issue was further underlined by data from the trade association representing CTF providers. As of Spring 2023, 42% of 18-to-20-year-olds, nearly a million young adults, had not claimed their savings.
This staggering figure suggests that many beneficiaries might not even be aware of these accounts.
The concerns are especially acute for young people from low-income backgrounds who stand to gain the most from these funds.
Additionally, the families of young adults without the mental capacity to claim their funds face complex and expensive processes through the Court of Protection and its equivalents.
As the government’s representative for the scheme, HMRC is being urged to work with the Ministry of Justice and its counterparts in the home nations to simplify the process and safeguard the legal rights of young people.
This massive, unclaimed sum in Child Trust Fund accounts highlights the need for a renewed effort to educate and engage young people about their financial rights and opportunities.
The unclaimed billions could markedly alter the financial futures of millions of young UK residents, but only if they become aware of their entitlement.
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.”
Spotted something? Got a story? Send a Facebook Message | A direct message on Twitter | Email: News@Deeside.comLatest News
