Hundreds of millions of pounds in children’s trust funds (CTFs) to provide financial support to young people in early adulthood are yet to be claimed, according to the spending watchdog.
The National Audit Office (NAO) has expressed concern that the accounts are at risk of being forgotten or lost track of by those who hold them.
He said estimates show that more than a quarter of CTFs remain unaffected for a year or more after their owners turn 18.
CTF is a long-term tax-free savings account for children born between September 1, 2002 and January 2, 2011, which they can access when they turn 18.
The government paid more than £2 billion to the CTF for the 6.3 million children born during the period. Most children received around £250 each from the government when the CTF started, with those from low-income families or local authority care receiving an additional £250.
Many CTFs are invested in stocks and shares, with a total market value of CTFs of £10.5 billion in April 2021.
Some of them belonged to young people who were over 18 and had not opened their accounts.
As of April 2021, approximately 320,000 CTFs have been redeemed in the seven months since the first CTF account holders turned 18 in September 2020.
175,000 (55%) of the account holders claimed and closed their accounts, and 145,000 remained unclaimed.
In times of economic hardship for millions of people across the country, it is important that the government does enough to ensure that young people are aware of and have access to trust funds for their children.
Gareth Davies, National Audit Office
By April 2021, around £394 million was unclaimed in mature CTFs held by young adults aged 18 and over, the NAO said.
It is unclear how many children and young people do not know or cannot find their CTF, the NAO said.
He added that HM Revenue and Customs (HMRC) plans to introduce the CTF in a communications campaign in 2023.
The NAO estimated that CTF providers, including banks and building societies, could earn up to £100m a year through payments on accounts.
Gareth Davies, head of the NAO, said: “At a time of economic hardship for millions of people across the country, it is vital that the Government does enough to ensure that young people are aware of and have access to their children’s trust funds. »
Meg Hillier, chair of the public accounts committee, said there was a need to proactively help people reconnect with their funds and said the money could be a “vital support for young people, especially those on low incomes” in a cost-of-living crisis. background”.
