Maybe you were born between September 1, 2002, and January 2, 2011. If that’s the case, there’s a possibility that your Child Trust Fund contains this unclaimed money, awaiting its unlocking. Financial commentator Martin Lewis claims that “thousands of people aged 18–22 with completely unused Child Trust funds are sitting on amounts worth as much as £2,212.” Let’s delve into the details of these funds, explain how to access them at no cost, and highlight the urgency of taking immediate action.
What is a Child Trust Fund (CTF)?
A child trust fund refers to the long-term, tax-free savings account created by the UK government with the intention of encouraging parents to save for the futures of their children. The government automatically paid an initial deposit of £250 or more to every child in the UK born between September 1, 2002, and January 2, 2011, depending on their family situation. The scheme aimed to ease the transition for young adults to adulthood by providing them with a small amount of money.
How Much Did You Get?
An estimated 670,000 Child Trust Funds, each with a mean value of £2,212, remain unclaimed. However, many young people are simply unaware that they have this available money to claim.
Why Have These Funds Gone Unclaimed?
Mostly, such funds go unclaimed due to ignorance; many young adults are not aware of or have forgotten that they have them. The young people assumed responsibility for the accounts when they turned 16, but they still retained control over the CTF. However, the young people could withdraw money only at 18 years old. The closure of the scheme in 2011 may have resulted in the lack of dissemination or omission of information regarding these accounts.
Actually, a UCAS survey very recently revealed that as many as 43% of university students wish to know how much money is in their Child Trust Fund, and 32% want to know how to claim it. Results further reveal that as many as 60% of students have heard of their CTFs from their parents, and hence, many may still be unaware.
How to Access Your Child Trust Fund for Free
The positive news is that it’s simple and free to claim your Child Trust Fund. Dreadfully, though, some companies are milking cash from young people by charging for the right to access their own cash—a process Martin Lewis has cautioned against. He claims you don’t have to pay a fee or give someone a cut of your savings to get the cash.
Martin Lewis’ Easy Steps to Claim Your CTF.
Find out who manages your Child Trust Fund. If you don’t know who manages your account, you can search for your Child Trust Fund provider free of charge on GOV.UK. To do this, you will need to know your National Insurance number and date of birth.
Contact the provider directly: Since you know where your money is, you can contact your provider for withdrawal or administration instructions.
Withdraw or Re-invest: Once you reach the age of 18, you have the option to either withdraw the money or reinvest it into an alternative account, such as a Junior ISA.
It’s simple—you don’t need to pay a third party to assist you in reclaiming your money.
Why You Must Act Now:
To most 18- to 22-year-olds, this would be a life-changing amount of money, especially for those just starting university, moving into their first home, or entering the job market. Spending the funds on education, starting a business, or even taking driving lessons could significantly impact someone’s future plans.
Young Enterprise’s chief executive, Sharon Davies, highlighted the critical need for financial education, particularly among disadvantaged young clients. Those from low-income backgrounds, who would have benefited the most from drawing down on the same accounts, hold the majority of the unclaimed CTFs.
Don’t get scammed.
Unfortunately, there are companies that prey on innocent people who do not know how simple it would be to get their money. Martin Lewis has seen advertisements from firms that want to make you pay to access your money or take a percentage of savings.
His advice is clear: “Don’t touch them. Don’t sniff them. Don’t smell them. Don’t go near them.”
If a company advertises that they can help you access your Child Trust Fund for a fee, there’s no reason to pay them.
What Can You Do With Your Child Trust Fund?
With access to your CTF, the possibilities stretch out endlessly. You can withdraw and use it to fulfill your desires, be it debt repayment, future investment, or any other desire you may have. Alternatively, you can re-invest the sum in an adult ISA and enjoy tax-free growth from then on.
If you’re uncertain about the optimal use of your money, it could be beneficial to seek financial advice from a reputable source, ensuring they are not trying to upsell you on unnecessary purchases.
Parents can still make a difference.
One more intriguing feature of Child Trust Funds is the fact that even after the scheme has ended, families can make further contributions to the account up to £9,000 a year. The money remains in the account until the young adult reaches a mature age, and contributions have no impact on benefits or tax credits.
What’s Next?
If you’re between 18 and 22 years old, now is the time to make sure you have a Child Trust Fund. Just a few minutes of your time could potentially result in thousands of pounds waiting for you.
For parents, now is also a beneficial time to remind your children or even help them trace their money. Financial advisor Angela MacDonald suggests that parents should encourage their teenagers to spread the word about the Child Trust Funds. Many young people are unaware of their potential savings.
Conclusion
Martin Lewis’ warning is simple but very crucial: if you’re under 22, you might have more than £2,000 waiting for you in a Child Trust Fund. No one has to pay anyone to access the money, and it might change your financial future forever.
