More than 670,000 young people yet to claim their child trust fund (CTF) are being reminded to cash in their stash, as HMRC reveals the average savings pot is worth £2,212.
A total of £10 billion is held in CTFs, with £1.4 billion languishing in unclaimed accounts belonging to 18-22 year olds. At age 18, savers are allowed to withdraw the money that has been squirrelled away for them. According to HMRC, 671,000 young people have yet to claim their cash.
CTFs were set up under the last Labour government, and discontinued and replaced by junior ISAs in 2011.
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It means that children and youngsters aged 13 to 22 are likely to have a CTF. While those aged 18 or over are being urged to claim their money, parents of younger teenagers may also have lost track of where the CTF is and how much money it contains.
“Many parents and children aren’t aware they even have the account, or don’t know who the money is with or how to track it down," comments Charlene Young, pensions and savings expert at the investment platform AJ Bell.
She adds: “The government's plea urging young people to come forward and claim their share of £1.4 billion stashed in matured CTFs highlights the magnitude of the problem of ‘continuing CTFs’ – where a child has turned 18 but their funds go unclaimed. Over half of the money in these accounts – £776 million – matured over a year ago."
We explain what CTFs are, who has them, how to track down a lost one - and if you're not 18 yet, whether you should move the money to a more competitive account.
What is a child trust fund?
CTFs are tax-free savings accounts held by those born between September 2002 and January 2011. They were available as cash savings accounts or investment accounts.
The government paid £250 when a child was born - or £500 to low-income families - meaning every CTF started off with some money inside.
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 forgotten they have an account, or don’t know where it is.
Extra contributions could be made and interest or investment growth would be accumulated. Young people can take control of their child trust fund at 16 and withdraw funds when they turn 18 and the account matures.
The average value of a CTF was £2,212 in September 2024, according to official statistics.
The scheme closed to new entrants in 2011 and was replaced by junior ISAs in November of that year.
What can you do with a CTF?
Anyone who has a CTF can transfer their funds to a more modern junior ISA (JISA). The two accounts are very similar: they have the same tax benefits, the annual limit is the same (£9,000), and the money is locked away until the age of 18.
However, junior ISAs typically have lower fees, better investment choices, or better interest rates.
"As highlighted by a Public Accounts Committee report published last year, many CTF providers are charging huge sums for managing the accounts, eating into the money. The report indicates many accounts are charging 1.5% annually for a portfolio of passive funds, whereas a JISA on a modern platform might cost around 0.25%, plus the cost of a tracker, which can be as little as a few basis points," notes Young.
Currently, savers can access interest rates of up to 5.2% in the most competitive cash JISAs, such as the one offered by Beverley Building Society. The CTF rate available from One Family, for example, one of the UK’s largest CTF providers, is currently 3%. That falls to 1.5% once the child turns 18.
Transferring your CTF to a JISA is straightforward - simply request a transfer form from the provider you want to move 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 last year that many account holders do not know about their savings or have lost track of them.
An estimated £1.4 billion is sitting in unclaimed CTFs belonging to youngsters aged 18 or over.
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.
An estimated £1.4 billion is sitting in unclaimed CTFs belonging to youngsters aged 18 or over.
HMRC is now urging young people to cash in their government-funded nest egg.
Angela MacDonald, HMRC’s second permanent secretary and deputy chief executive, comments: "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."
How to track down your lost CTF
CTFs are not held by government but are held in banks, building societies or other saving providers.
If teenagers or their parents and guardians already know who their CTF provider is, they can contact them directly. There's a handy list of CTF providers on gov.uk.
If they don't, they can use this tool on the government website. Young people will need their National Insurance number and their date of birth to access the information.
MacDonald at HMRC stresses that this is a free service, and that parents and youngsters do not need to pay anyone to locate their CTF.
According to HMRC, third-party agents are advertising their services offering to search for CTFs and agents will always charge - with one charging up to £350 or 25% of the value of the savings account.
In the last year, more than 450,000 customers used the free gov.uk tool to locate their child trust fund.
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