Unlocking Hidden Wealth
In a nationwide call to action, HM Revenue and Customs (HMRC) is urging nearly 430,000 young adults between the ages of 18 and 21 to claim their unclaimed Child Trust Funds, each potentially worth an average of £2,000. This initiative comes as part of UK Savings Week, taking place from September 18th to 24th, 2023.
Awaiting Young Claimants
Child Trust Funds, the long-term, tax-free savings accounts set up for every child born between September 1, 2002, and January 2, 2011, come with a government-contributed initial deposit of at least £250. These funds can be accessed when the account matures, typically when the child reaches 18.
Survey Sheds Light on Student Interest
A recent survey conducted by UCAS, targeting first and second-year university students, delved into the interest levels regarding Child Trust Funds. The results revealed that 43% of respondents were most interested in knowing the balance of their accounts, while 32% wanted information on how to claim the funds. Interestingly, the survey found that 60% of students learned about Child Trust Funds from their parents.
The Search for Unclaimed Wealth
For both young adults and parents, the process to locate these dormant accounts has been streamlined through the government’s official website, GOV.UK.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, emphasized the importance of these funds, stating,
“Many 18-21-year-olds are starting out in first jobs or apprenticeships, beginning university, or moving into their first homes, and their Child Trust Fund is a pot of money with their name on it. I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.”
The Enormous Scale of Opportunity
Presently, there are a staggering 5.3 million active Child Trust Fund accounts. Young individuals aged 16 or older have the authority to manage their own Child Trust Funds, but withdrawals can only occur once they reach the age of 18. Since the scheme’s eldest beneficiaries turned 18 in September 2020, more than 500,000 matured Child Trust Fund accounts have been claimed or transferred into Individual Savings Accounts (ISAs).
Nurturing Financial Futures
Families continue to have the privilege of contributing up to £9,000 per year tax-free into a Child Trust Fund until the account matures. The funds remain within the account until the child decides to withdraw or reinvest them into another account.
The UCAS survey findings showed that a significant 74% of respondents were already aware of the existence of Child Trust Funds.
Survey Highlights Gender and Age Disparities
The survey further highlighted some interesting demographics regarding awareness levels. It found that a higher percentage of men (75%) were aware of Child Trust Funds compared to women (73%). Moreover, 78% of 19-year-olds were conscious of these funds, while this percentage slightly decreased to 71% among 20 to 21-year-olds.
Empowering the Uninformed
Crucially, the survey revealed that 76% of those who had not yet claimed their Child Trust Fund were likely to take steps to learn more about how to withdraw their funds.
Sharon Davies, CEO of Young Enterprise, joined the call for action, saying, “We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely. A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult ISA or put towards driving lessons, education, or starting a business.”
A Lifeline for the Future
In conclusion, the untapped potential within Child Trust Funds has the power to be life-changing for countless young adults. The lack of awareness surrounding them underscores the significance of financial education and early financial planning. It is a call to action that could have profound implications for the financial futures of thousands across the UK.