CTFs – One year on
One year on: more than £600 million of Child Trust Funds remain unclaimed
It’s been a year (1 September 2020) since the first Child Trust Funds matured, but Britain’s youngsters are sitting on a goldmine of unclaimed cash.
Since the first Child Trust Funds (CTF) matured last September, over half a million teens across the country have received letters telling them to claim the money, however only half of them have acted.
The average CTF is valued at more that £2,000, and with more than 300,000 of maturities not acted on, there is around £600 million set aside and waiting for instructions. In the meantime, that money will continue to be invested in either a cash fund or in a stocks and shares account.
Child Trust Funds were introduced by the Government in 2005 as a tax-free savings account for children. Available to those born between 1 September 2002 and 2 January 2011, parents received a voucher of either £250 or £500 to set up an account in their child’s name.
As eligible teenagers become aware of their CTF, more and more are starting to claim their funds. Currently 46% of CTFs remain unclaimed, compared to 80% which sat unclaimed following the months after the first fund maturity.
According to the Association of Financial Mutuals (AFM), whose members hold one third of CTF’s, around 12% of funds have reached maturity. As more young people start to gain access to this cash, the AFM explains that as well as messages on social media encouraging people to act, providers are improving their own messaging. However, many young people remain reluctant to act, and this is a consequence of confusion, a lack of trust in financial providers, as well as failings in financial education.
It is up to the account holder of the CTF to decide what to do with the money. Their options are to withdraw the full amount, leave it in the fund, or reinvest the money into other savings products.
Martin Shaw, CEO of the Association of Financial Mutuals has some useful advice for Child Trust Fund owners looking to continue to invest their savings: Read the full article here
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