Hundreds of thousands of young adults are missing out on an average of over £2,200 via a largely forgotten Government scheme. The Child Trust Fund (CTF) was launched in 2005 by Gordon Brown, during his time as Chancellor under Tony Blair‘s New Labour government.
The initiative was set up to ensure that Britons had built up some savings by the time they reached 18, and to educate young people about the benefits of investing. Children born between September 1, 2002 and January 2, 2011, were eligible for the long-term tax-free savings account. This means the people who have one are between 15 and 23 years old today. Around 6.3 million accounts were set up, many of them automatically, with babies born between the two dates given £250, and those in low-income families or local authority care receiving an additional £250 on top.
Some got a further £250 payment after turning seven, depending on their date of birth, The Times reports. Parents were able to put their own money into them too, and can continue to add up to £9,000 a year to an existing CFT currently.
The Government sent out initial vouchers for parents and guardians to set up accounts with, but would open them automatically with an approved provider anyway if they weren’t returned before the deadline. As a result, many people will have accounts and be unaware that they exist.
There are three types, most of which (around 79%) are stakeholder accounts where money was initially invested in the stock market before moving to less risky investments after the child turned 13.
You could also get a cash account akin to a cash savings account, or an investment-based account where the money is invested in stocks, shares, and bonds, with potentially higher returns – though at higher risk. These two account types make up around 17 and 4% of the total, as per the outlet.
According to the Government, accounts gave grown to an average £2,242. And while amounts in each account will vary greatly, HMRC says the latest figures show 758,000 young people could be missing out.
However, not everyone who has an account can claim the funds yet. While the money belongs to the child, they can only take it out when they’re 18, though they can take control of the account when they’re 16.
Some 3.5 million of the 6.3 million trust funds hadn’t yet matured as of October.
None of the income or profit from the Child Trust Fund is taxed, and it doesn’t affect any benefits you receive. The Child Trust Fund scheme closed in 2011 and was replaced by the Junior ISA scheme.
And while it’s not possible to have a Child Trust Fund and Junior ISA . You can ask the provider to transfer the fund into a Junior ISA when you open one.
If you know who the account was set up with, you can contact your Child Trust Fund provider directly. If you don’t know, you can ask your parent or guardian if possible.
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