- The FCA has urged university and college students and their parents to check whether they have a forgotten Child Trust Fund (CTF)
- It says 760,000 matured CTFs are sitting unclaimed, each worth £2,000 on average according to HMRC data
- Warning over charges to find lost CTFs – and how to find them for free
- How forgotten CTFs could provide financial relief to university and college students
- Why it’s not too late to use CTFs as a stepping stone to develop a long-term savings and investment habit
Dan Coatsworth, head of markets at AJ Bell, comments:
“Students heading to college or university in September could have a welcome surprise of a few thousand pounds that’s been hidden away, if their parents opened a Child Trust Fund that they’ve since forgotten exists.
“The FCA highlights HMRC data that shows 760,000 matured CTFs, worth an average of £2,000 each, remain unclaimed. That’s a collective £1.5 million pot of gold waiting at the end of the rainbow.
“Getting a slice of that money could make a massive difference to someone struggling to make ends meet during their studies.
“Many university students rush from the classroom to a part-time job to help pay the bills or fund essentials like a new laptop. That can leave them exhausted, much to the detriment of their studies. The alternative for many students is begging the Bank of Mum or Dad for cash, which puts financial pressure on parents.
How do you check for a lost or unclaimed account?
“It’s vital that anyone aged 18 or over who was born between 1 September 2002 and 2 January 2011 checks to see if they have a lost or unclaimed Child Trust Fund.
“Importantly, you don’t to need pay a middleman to find it for you. The FCA has found examples of companies charging £400 to locate an account or recurring monthly fees. But there is no need to pay these charges and the regulator has urged those seeking lost CTFs to keep this in mind.
“Checking to see if you have an account is simple and free. Just go to the government website and use its portal to see where your account is held.
What are Child Trust Funds?
“Child Trust Funds are long-term, tax-free saving and investment accounts created by the UK government in 2002. The government gave either £250 or £500 for low-income families in cash vouchers to start the account, with the money belonging to the child.
“Anyone was able to top up the account, up to a £9,000 annual limit, and the money could be withdrawn once the recipient turned 18. The scheme stopped in 2011 and was replaced by Junior ISAs.
“Child Trust Funds were meant to build a nation of investors, with the initial payment forming a strong foundation for a lifetime of investing. Even though the scheme was discontinued at the start of 2011, existing accounts were kept alive unless closed down once the owner turned 18 or were transferred to a Junior ISA.
Do I have to spend the money straight away?
“Anyone discovering an untapped Child Trust Fund and aged 18 or over doesn’t have to spend the money straight away.
“It could be invested and hopefully grow to help post-education milestones like buying a house or getting married. For some people, it could be the first stepping stone towards building a long-term saving and investing habit.
“The same principle applies to recipients under 18 years old as they can still choose to invest the money, if it isn’t already.”
