Almost 42% of young adults aged between the ages of 18 and 20 have not claimed savings in their matured Child Trust Fund (CTF), according to data from the account providers’ trade association.

According to the Share Foundation, the value of unclaimed savings is now over £1.7 billion, while a 2022 study by HMRC estimated teenagers could have an average of £2,100 sitting in their accounts.

WHAT IS A CTF?

The government launched the Child Trust Fund scheme in 2005 meaning every child born in the UK between 1 September 2002 and 2 January 2011 was eligible for a tax-free long-term savings account which parents and family members could pay into.

If a parent or guardian was not able to set up an account for their child, HMRC opened a savings account on the child’s behalf. To encourage future saving and start the account, the government provided an initial deposit of at least £250.

In 2010, the government announced it would no longer run the scheme beyond the end of the year and in 2011 it launched the Junior ISA.

According to HMRC, around 6.3 million accounts were set up, almost three quarters of which were opened by parents and guardians using a government voucher, with the government making £2 billion of contributions. Like a Junior ISA, CTFs come with a separate cash and investments iteration.

Where children have a Child Trust Fund, families can still pay in up to £9,000 a year tax-free. Young adults are able to take over and manage their account at 16 years old and access the funds at age 18, after which the account matures and no further money can be deposited.

They can either withdraw the funds from the matured Child Trust Fund account or reinvest it into another savings or investment account. Until the child withdraws or transfers the money, it stays in an account that no-one else has access to.

The first young adults with these accounts will have reached the age of 18 in September 2020, while as of April 2021 the total value of child trust funds was £10.5 billion or an average value was £1,911 per account.

Many eligible teenagers who have yet to claim their savings might be starting university, apprenticeships or their first job, so the lump-sum amount could offer a financial boost at a time when they need it most. 

CAN YOU TRANSFER A CTF TO A JUNIOR ISA?

While a CTF is, for an intents and purposes, the same as a Junior ISA, switching would allow you to have access to a broader range of providers and, likely, more flexibility over what you can invest in.

If your child is under 18 then you can transfer their CTF to a Junior ISA. You will need to open a Junior ISA account before you can make a CTF transfer.

Your child can’t hold a CTF and a Junior ISA at the same time so you will need to fully transfer over their CTF then close their account.

Only the registered contact of a CTF can request to transfer the account, and the same person must also be the registered contact for the new Junior ISA.

When you make this transfer to a Junior ISA, remember you will be responsible for investing the cash not your child or children as they are not legally old enough to do so.

HOW DO YOU FIND A LOST CTF

If you, a family member or your child have lost track of the CTF, what should you do next?  

If you know who the fund was set up with, in the first instance you can contact the account provider directly.

You can also search the HMRC website on gov.uk for ‘child trust funds’ and the agency can usually tell you when the account was originally opened.

You will need your national insurance number and child adoption details (if applicable), as well as the child’s full name, address and date of birth and any previous names used for the child. You can also include the child’s national insurance number if you have it.

After submitting this information you will normally receive a letter from HMRC with the details of the CTF provider within three weeks of your enquiry. If you don’t receive a response from HMRC you can write to them with your reference number, if you were given one.

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