MILLIONS of children have a hidden savings account that could be worth THOUSANDS of pounds.
In April last year, there was an incredible £10.4 billion still left sitting in Child Trust Funds.
1
On average each account is thought to have £1,911 lying in wait.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The incredible sums sitting neglected in CTFs aren’t just a missed opportunity to make more of your money – a huge chunk of it could end up as money down the drain.
“There’s a good chance that these children never even knew they had a CTF, because of the 6.3 million accounts opened, 1.8 million of them were opened by HMRC after the parents didn’t make a choice.
“Others have been forgotten along the way.”
But if parents track down their little one’s CTF, they could potentially uncover thousands of pounds of cash.
The exact amount of cash that could be sitting forgotten will vary though.
When the scheme was set up, parents were given vouchers worth £50 to £1,000 depending on when the child was born, as well as whether they were on a low income at the time.
If parents didn’t set up a CTF on behalf of their child and cash in the voucher, HMRC would step in and do this on the child’s behalf.
Most read in Money
But because of that “auto-enrolment” most parents won’t have touched the accounts since.
Thankfully, they’re easy enough to track down.
As it stands, almost 5.5 million accounts are still open.
“Given that almost 4.6 million didn’t have any money paid into them during 2020/21, that’s potentially millions that could have gone astray,” said Sarah.
How to find the cash
You’ll need to start by checking if you have any paperwork stashed away in a folder or drawer at home.
If you’re unsure if that even exists, you can fill in an online form via the Gov.uk website to check that there’s a CTF account in your child’s name in any case.
An easy way to know right away though is to check their birthday.
Children born between September 1, 2002, and January 1, 2011, qualified for a CTF.
Parents looking for a child’s account need their Unique Reference Number from an annual CTF statement or their National Insurance number.
If you’re looking for your own trust fund, you’ll just need your National Insurance number.
This is normally sent automatically in the three months before your 16th birthday, but you can track it down via Gov.uk if you’ve lost it.
Once the form is complete, HMRC will send you details of the CTF provider by post within three weeks.
But even once you’ve got that far, you can’t just draw out the cash whenever you want.
You have to be 18 to get access, so if the big birthday hasn’t rolled around yet you still have a wait on your hands.
The first cohort only gained access for the first time from September 2 last year.
There is a chance parents and children waiting on their trust funds are missing out on even more cash though.
The Child Trust Fund initiative was scrapped in 2011, but a better JISA option is “well worth” transferring over to, according to experts.
More on offer
Junior ISA accounts are also tax-free savings accounts – and you can save up to £9,000 in.
CTFS were replaced by Junior ISAs in November 2011, so you can’t get one now even if you wanted to.
That’s no issue though, as savings experts explain that you could get more “bang for your buck” with the alternative savings account.
Sarah said: “The CTF might feel like an easy option for putting away a nest egg for your kids: you already have the account, so you may as well make use of it.
“However, it has much less to offer than a Junior ISA, and you can now switch from one to the other.”
The money is still locked away until the age of 18, after which it will belong to the child.
But the JISA has a number of advantages.
If you’re keen to keep your money in cash, they tend to offer more competitive rates.
The experts at Hargreaves Lansdown explained that at the moment you can get 2.6% on a JISA – whereas the best CTF is offering only 2.1%.
If you’re in an investment CTF you may be paying over the odds in charges because stakeholder CTFs are essentially trackers capped at 1.5%.
And JISAs are usually much cheaper; an equivalent tracker is almost a third of the cost, revealed Sarah.
One dad was able to save a whopping £180,000 for his three kids using JISAs, so they shouldn’t be ignored.
Meanwhile, another budding saver has managed to stash away £2,700 at only 11 years old.
Setting aside just a little every month could leave your own kids with THOUSANDS for when they’re older, just like with the CTFs.
We pay for your stories!
Do you have a story for The Sun Online Money team?
