Margaret Greenwood MP is urging young adults to make sure they don’t miss out on unclaimed Child Trust Funds.
It recently emerged that around £1.7 billion is waiting to be claimed by almost a million young adults, at an average value of around £1,900 each.
In July, the Parliamentary Public Accounts Committee issued a report on Child Trust Funds which are long-term tax-free savings accounts for children born between 1 September 2002 and 2 January 2011, which they can access when they turn 18. They were set up under the last Labour government.
Overall, around 6.3 million accounts were created and the government paid £2 billion into them. 72% of accounts were set up by parents and guardians using a voucher sent to them by HM Revenue & Customs (HMRC).
The voucher allowed them to open an account for the child with a Child Trust Fund provider of their choice. HMRC set up the rest of the accounts on children’s behalf when their parents or guardians did not do so within a year of the voucher being sent to them.
In their report, the Public Accounts Committee found that: “Billions of pounds are sitting in the Child Trust Fund accounts of millions of young people currently aged 12 to 20. The value of unclaimed accounts is potentially over £1.7 billion, with a large part of it likely to have been forgotten about by everyone except the financial institutions profiting from it.”
A separate National Audit Office (NAO) investigation, which reported in March of this year, estimated that Child Trust Fund providers – including banks and building societies – could be earning collectively up to £100 million per year through charges on accounts.
The Public Accounts Committee has said that some providers are not doing enough to link up forgotten accounts with their owners, while HMRC is not doing enough to help providers who are experiencing difficulties contacting account holders.
The committee has also suggested that it is likely that a high proportion of the unclaimed money belongs to young people from low-income backgrounds.
It has set out a number of key recommendations in its report, including that HMRC should do more to find and contact young people who have not claimed their Child Trust Funds, to ensure they are aware they have an account and know how to access their money.
Another key recommendation is that HMRC should, at the appropriate time within the next 24 months, evaluate the Child Trust Fund scheme to understand what has been achieved from government’s £2 billion investment and what impact it has had on the lives of young people.
Margaret Greenwood MP said, “Many young people across the country are missing out on money that is rightfully theirs.
“Everyone born between 1 September 2002 and 2 January 2011 will have a Child Trust Fund, yet many people do not even know that they exist.
“It is important that children and young people born between these dates, or their parents, take steps to locate their Child Trust Fund if they haven’t already done so.
“I would urge anyone who is entitled to a Child Trust Fund to make sure they know how to access their money.
“According to the National Audit Office, each Child Trust Fund holds on average £1,911. That money will make a real difference to young people.
“The funds were set up by the last Labour government in order to give all children a financial nest egg by the time they reached 18.
“There are estimated to be almost a million young adults missing out on funds that they are entitled to. It is likely that many of these will be people from low-income backgrounds.
“Nationally there could be more than £1.7bn sitting in Child Trust Fund accounts waiting to be accessed.
“I would also urge the government to fully take into account the report by the Public Accounts Committee and seriously consider its recommendations. We need to see concerted action from government on this.”
You can find out more information about Child Trust Funds, including details about how to find a fund here: https://www.gov.uk/child-trust-funds
The report by the parliamentary Public Accounts Committee can be found here