As many as one million young people across the UK could have £2,000 to their name sitting in unclaimed child trust funds (CTF), according to new data from the HL Savings & Resilience Barometer.
Specifically, the Public Accounts Committee says there could be £1.7 in unclaimed child trust funds. This comes recently after a report published by the BBC suggested as many as 80,000 young people’s assets could be locked in their CTF due to their lack of capacity to make decisions.
Indeed, the current Court of Protection process is described as “lengthy and expensive”, meaning just 15 CTFs were accessed via this method in 2021.
What’s more, the report – authored by Renaissance Legal and reported by the BBC – suggests that by 2029 there could be up to £210 million locked away in these accounts, with some young people having as much as £75,000 in their account.
The government has, however, published a new guide to help parents and carers better understand their rights and how to manage the finances of disabled young people should they lose the capacity to make decisions for themselves.
Either way, the figures locked in CTFs will pose a concern amidst a cost of living crisis that has, on average, left those aged 20-24 with no money at all left over at the end of the month, with many spending more than they earn.
“Those on lower incomes and those whose parents weren’t financially engaged when they received their voucher – so never knew where it was invested – are the most likely to be completely in the dark,” says Sarah Coles, head of personal finance, Hargreaves Lansdown, who also suggests this group are the ones who are most likely to need the funds. She continued:
“A Commons Committee in May heard that part of the problem was the ‘lost years’, from when the scheme closed to new entrants in 2011 to when they started maturing in 2018/19. HMRC says CTFs fell down the priority list, so they didn’t keep a close eye on providers. In the meantime, those providers had been unable to contact hundreds of thousands of parents and children – often because they had moved on.”
Some providers have, however, “gone to real lengths” to contact those with accounts, says Coles:
“HMRC has also taken some steps including sending tax ambassadors into schools to explain the scheme, and including information about CTFs when they send 16-year-olds their NI numbers. However, clearly, more needs to be done to let young people know about these accounts. There were 6.3 million accounts opened in total – 1.8 million of them opened by HMRC after parents didn’t make a choice. It means the million young people with neglected accounts are likely just to be the first of many.