£1.7bn lies unclaimed in government child trust funds – but most eligible young people have never heard of them

24/08/2023

ACCORDING to new research published today by digital investment service, Wealthify, in conjunction with the Centre for Business and Economics Research (CEBR), more than half (51%) of 16 to 18-year-olds are unaware of the existence of Government Child Trust Funds (CTFs) — with more than half (58%) not knowing how to claim one.

The long-term tax-free savings account was launched by the Government in 2005 for all children born in the UK between 1 September 2002 and 2 January 2011.  Money was put in by the Government and parents had the option to top it up. The first CTFs came to maturity in 2020 and children will continue to reach the age to claim theirs up to 2029.

According to recent data from the Public Accounts Committee (PAC), there is currently £1.7bn in lost CTFs and the HMRC website values the average account worth £2,100.***

However, Wealthify’s research shows a shocking lack of awareness amongst young people, who risk missing out on money that is due to them.  Even many young people who are aware of CTFs are unsure if they are eligible (25%) or how to go about claiming their pot of money (58%). Their parents are similarly unaware, even of the CTF initiative itself (37%).

Teenagers who are planning to access their funds are mostly opting to put the money in a savings account (33%), towards a university education (25%), or to purchase a car (16%).

Andrew Russell, CEO of Wealthify comments: “Child Trust Funds are a leveller because they were available to all children born in the UK at that time, regardless of background.  For young people on the cusp of adulthood, gaining access to a lump sum like this offers a unique opportunity to engage positively with money, just as they become financially independent. But too many teens risk missing out on this once-in-a-lifetime chance to kickstart their financial future, simply because they don’t know about it. Similarly, we risk losing the opportunity to empower a whole generation of young people with financial skills, at a time when they have never been more motivated to engage.

“We have partnered with financial education and enterprise charity, Young Enterprise, to help raise awareness of the availability of Child Trust Funds — and turn this into a powerful moment to engage young people with financial education. In September, we’re launching free tools for teachers, centred on CTFs and designed specifically for 16 to 18-year-olds to help them get to grips with their financial choices. It’s a start, but we must find more ways to ensure this money gets into their hands, and that financial education in schools is made more of a priority for kids at this critical age.”

Sharon Davies, CEO of Young Enterprise, adds: “In so many households, worries about managing money have been exacerbated by the cost-of-living crisis. It is therefore crucial for young people to be informed and educated about all resources available, to ensure they are equipped with the skills to create a positive relationship with money, and a path to a secure future. Child Trust Funds have the potential to be a life-changing tool that a significant number of 16–18-year-olds have no knowledge about, even though they present an incredible opportunity to help young people learn to engage with money management from an earlier stage in life. In our 60th year of helping millions of young people, we are excited to partner with Wealthify to raise awareness around the availability of Child Trust Funds, in collaboration with teachers, and provide beneficial financial education resources to young people from an early age.”

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