Gen-Z age group urged to check whether they are sitting on unclaimed pot of cash
The average child trust fund is worth more than £2,200.
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Your support makes all the difference.Around 671,000 young adults are sitting on unclaimed pots of cash worth more than £2,000 on average, according to HM Revenue and Customs (HMRC).
The revenue body is reminding 18 to 22-year-olds with unclaimed child trust funds (CTFs) about their windfalls – with the average savings pot worth £2,212.
CTFs were set up for children born between September 1, 2002 and January 2, 2011.
Many children got around £250 each from the state at the time their CTF was started, while those from low-income families or in local authority care received an additional £250.
Young people can take control of their account at 16 and withdraw funds when they turn 18.
Thousands of child trust fund accounts are sitting unclaimed
But some young adults may have forgotten about their accounts or be unaware one was set up on their behalf.
The savings are held in banks, building societies or other saving providers. The money stays in the account until it is withdrawn or re-invested.
If teenagers or their parents and guardians already know who their provider is, they can contact them directly.
If they do not know where their account is, they can use an online tool on gov.uk.
People will need their national insurance number and their date of birth to access the information.
The CTF scheme closed in January 2011 and was replaced with Junior Isas.
Angela MacDonald, HMRC’s second permanent secretary and deputy chief executive, said: “Thousands of child trust fund accounts are sitting unclaimed – we want to reunite young people with their money and we’re making the process as simple as possible.
“You don’t need to pay anyone to find your child trust fund for you, locate yours today by searching ‘find your child trust fund’ on gov.uk.”
HMRC said third-party agents are advertising their services offering to search for CTFs, but people using them face potential charges, which could include a portion of the value of the savings account.
Using an agent can significantly reduce the amount received, HMRC said.
Charlene Young, a pensions and savings expert at AJ Bell, said: “Once you’ve tracked down the money you can choose what to do with it. Your options are to transfer it to an adult Isa or withdraw the money. Until then, your money will just sit in an account that no-one else has access to, possibly paying very high charges.
“Anything you transfer to an adult Isa at maturity will not count towards your annual Isa allowance, which is £20,000 for over-18s.”
She said it could “make sense” for some under-18s who hold a CTF to transfer it to a junior Isa, where the choice of investments could be wider.
Ms Young said: “The money will still be locked up until you turn 18, but the tax-free benefits of Isa investing still apply. You can transfer the entire CTF into a junior Isa and still add up to £9,000 to it in the same tax year.”