Could your money be in one of almost 430,000 unclaimed Child Trust Funds?

Millions of pounds are languishing in unclaimed Child Trust Funds. We look at how to track them down and how to make the most of your savings.

Girl putting money in piggybank
(Image credit: MoMo Productions)

Nearly 430,000 young people have unclaimed Child Trust Funds (CTF), according to HMRC, with the average pot valued at £2,000. If you or your child are aged 13-21, could you have an unclaimed CTF?

If you didn’t do anything with your initial contribution from the government, it will have been automatically invested in a stakeholder fund. But, to date, a lot of these funds have not yet been claimed. 

Some parents have simply forgotten they have an account, or don’t know where it is.

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“Many young adults might not be aware that there is a cash pot in their name waiting to be claimed,” says Myron Jobson, senior personal finance analyst at interactive investor

“With the typical CTF valued at £2,000 this cohort could be sleeping on a decent amount of money that could boost their financial resilience amid the cost of living crisis.”

What is a Child Trust Fund?

CTFs are tax-free savings accounts held by those born between 2002 and 2011. The government paid £250 when a child was born and another £250 when they turned seven. Low-income families received two £500 vouchers.

Extra contributions could be made and interest or investment growth would be accumulated. The child could then access the fund when they turned 18. 

The average value of a CTF was around £2,000 in April 2022.

The scheme closed to new entrants in 2011 and was replaced by Junior ISAs in November 2011. Anyone who has a CTF can transfer their funds to a Junior ISA to take advantage of lower fees, better investment choices, or better interest rates for those who opt for cash Junior ISAs.

What can you do with a CTF?

If you’re still holding a CTF, “there’s every chance your money is in the wrong place”, says Sarah Coles, head of personal finance at Hargreaves Lansdown

“CTFs have far less to offer than Junior ISAs, and you can now switch from one to the other,” says Coles. “The two accounts have the same tax benefits; the annual limit is the same; the money is still locked away until the age of 18; and it will belong to the child at that stage. However, if you've opted for a cash CTF, you can get a better rate in a JISA”. 

Currently, savers can access interest rates of 4.95% in the most competitive cash JISAs, such as the one offered by Coventry Building Society. This is streets ahead of CTFs. The CTF rate available from One Family, for example, one of the UK’s largest CTF providers, is currently 2.30%. That falls to 1.50% once the child turns 18.  

Transferring your CTF to a JISA is straightforward - simply request a transfer form from the provider you want to transfer to and they will contact the CTF provider. Bear in mind this can take a few weeks, especially if you first need to find out who your CTF provider is.

Once a child turns 18, they can use the money or move it into an adult ISA and continue paying into it. CTFs and Junior ISAs legally belong to the children and only they can access them when they are 18, so parents beware, they may just choose to cash them in.

Why are child trust funds going unclaimed?

The Public Accounts Committee (PAC), which scrutinises government spending, raised concerns that many account holders do not know about their savings or have lost track of them.

In July 2023, a cross-party panel of MPs said a total of £1.7bn was sitting in unclaimed CTFs. 

HMRC must do more to find and contact those young people, many of whom are from low-income backgrounds, the MPs said.

They also said providers, which are earning “very high” fees of up to £100 million a year for passively managing CTFs mostly composed of government money, are not doing enough to link up forgotten accounts with their owners.

The committee also said families and carers of young people lacking mental capacity are finding it costly and complicated to access CTFs.

PAC chair Dame Meg Hillier said: “The aims behind Child Trust Funds are laudable – for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits.”

“Schemes like these need careful planning so that they are not forgotten at the point when they mature. Our inquiry heard a world of difference can be made to care leavers in particular, with Funds acting as a jump-start into adult life.”

“HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be.”

How to track down your lost CTF

CTFs started maturing in 2018, but HMRC failed to keep a close eye on providers, who were then unable to contact hundreds of thousands of parents and their children.

If you think you were eligible for a CTF but didn’t do anything with the voucher, then the money will be somewhere in a default fund.

To track down your CTF, you can use this tool on the government website. You’ll need to sign up to a Government Gateway account, if you don’t have one already. 

Nicole García Mérida

Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.

With contributions from