Around 760,000 young adults in the UK are missing out on an average of £2,000 each sitting in forgotten Child Trust Funds, according to new figures from HMRC. The accounts were set up for children born between September 2002 and January 2011, with the government paying in at least £250 to start them off.
Tara Evans, Personal Finance Editor at Confused.com, said: "With so many students heading back to college and university this month, and money tight for a lot of young people, it's worth remembering that a forgotten pot of savings could be sitting unclaimed. It's easy to assume this money is gone or was never there, but it almost always is, and it still belongs to the young adult it was opened for."
How to trace a Child Trust Fund for free
Many young people do not know the account exists or have lost touch with it over the years. The good news, according to Evans, is that tracking one down is quick and completely free. She added: "For a student, a couple of thousand pounds could go a long way, whether that's rent, textbooks or simply taking the pressure off. Once you've found the account you can withdraw the money or move it into an ISA to keep it growing tax free. It only takes a few minutes to check, and it could be a welcome boost for the start of term."
Myrtle Lloyd, HMRC’s chief customer officer, said: "If you’re between 15 and 24, you could be sitting on a savings payout and not even realise it. Just search 'find my Child Trust Fund' on GOV.UK to find your savings account today."
Warning about claims firms charging fees
Chris Knight, director of insurance at the Financial Conduct Authority (FCA), warned against paying third-party firms to trace the funds. He said: "A Child Trust Fund can be a welcome source of extra cash at a time when many young people need it most. But you don't need to pay someone else to claim what's rightfully yours – tracing and accessing your own Child Trust Fund costs nothing, so think twice about handing over a chunk of your savings to a claims firm for a job you can do yourself."
The FCA has seen cases where customers were charged £400 to locate an account and some firms charging a monthly subscription for a one-off tracing service. The regulator stated: "Some companies, including those advertising on social media, are offering to 'find' and claim Child Trust Funds on people's behalf – often for a hefty fee or a cut of the final payout."
Potential uses for the unclaimed money
According to the FCA, hundreds of thousands of young people could be missing out on money that could go towards new laptops, textbooks, rent deposits or the everyday costs of student life – or setting them up with savings for their future. The FCA said: "As students return to college and university this month, the FCA is urging young adults and parents to check whether they have a forgotten Child Trust Fund waiting to be claimed – potentially worth thousands of pounds."
The regulator added: "Figures from HMRC show that 760,000 matured Child Trust Funds, worth an average of £2,000 each, remain unclaimed." Missing funds can be traced for free without losing a penny to a middleman, and the process takes only a few minutes on the GOV.UK website.
