Thousands of Young UK Adults Could Have £2,000 Awaiting Them

Young adults, aged between 18 and 21 here in the UK, have unclaimed Child Trust Funds, a report claims.

01:18 28 October 2023

According to HMRC, there are approaching 430,000 young adults, aged between 18 and 21 here in the UK, who have unclaimed Child Trust Funds. The average value of each fund is around £2,000. During UK Savings Week (18 to 24 September 2023), the UK government ran an initiative headed by HMRC in an effort to make the owners of these accounts aware of their existence.

CTFs were introduced as long-term, tax-free savings accounts for children born from the 1st of September 2002 to the 2nd of January 2011. The government generously contributed an initial deposit of at least £250 to these accounts. The primary objective was to ensure that every child had some savings by the time they reached adulthood.

While the child owner can take control of their account once they reach 16 years of age, the funds only become accessible once the child turns 18. Once 18, the young adult can withdraw the funds and spend them as they wish or reinvest them in another investment, such as an adult ISA.

If you still have a live CTF, contributions of up to £9,000 per annum can be made to the account until such time as it matures.

Interestingly, a survey by UCAS highlighted that many university students were keen to know the amount in their CTF accounts and the process to claim it. Significantly, 60% of these students said that they learned about their CTFs from their parents, indicating the pivotal role that parents play in the financial education of their children, even into their adult years.

Angela MacDonald, a top official at HMRC, emphasised the importance of these funds, especially for young adults who are just starting their journey – be it in jobs, universities, or setting up their first homes. She urged young individuals to utilise the online tools available to trace their CTFs or encouraged parents to inform their teenagers about the existence of such funds.

If you want to check whether or not a CTF was created for you when you were a child, you can ask HMRC.

There are currently over 5.3 million active CTF accounts. Since the inception of CTF schemes, over 500,000 matured accounts have either been claimed or transferred to an Individual Savings Account (ISA).

Sharon Davies, the CEO of Young Enterprise, highlighted the potential of these unclaimed funds. She pointed out that a significant portion of the unclaimed money belongs to young individuals from disadvantaged backgrounds – the very group that could benefit most from these funds. She further stressed the importance of financial education from a young age.

In the broader context of savings, understanding the average retirement savings is crucial for young adults. It provides a perspective on how much one should be saving at different stages of life to ensure a comfortable retirement.

The concept of saving is not just about setting aside a portion of one's earnings. It's about understanding the value of money, the importance of financial security, and the peace of mind that comes with having a safety net. In today's fast-paced world, where economic uncertainties are a given, having a financial cushion can make a significant difference.

Moreover, the earlier you start saving, the more you can benefit from the power of compound interest. This is where the money saved earns interest, and then the interest earns interest, leading to exponential growth over time. For young adults, this is an opportunity to not only claim their CTFs but also to understand the broader implications of savings and investments.

Furthermore, financial literacy is not just about knowing how to save or invest. It's also about understanding your financial rights and, being aware of the various financial products that are available in the market today and making informed decisions about which ones might benefit you most. It's about planning for the future, setting yourself financial goals, and working towards them diligently.

In conclusion, while many young Brits might have forgotten about their CTFs, it's a golden opportunity to claim what is rightfully theirs. It's not just about the money; it's about understanding the value of savings, financial planning, and securing your future.

As the UK moves forward, initiatives like these will play an important role in shaping the financial landscape and ensuring that the younger generation is better equipped to understand and navigate the complexities of the financial world.