Child Trust Funds: Nearly a million accounts not accessed

Ramandeep Kaur has saved more than £7,000 for her son Harry but fears bureaucracy will keep him locked out of his account

Nearly a million young people have yet to claim their Child Trust Funds, MPs have warned.

The Public Accounts Committee estimates that more than £1.7bn is sitting in accounts waiting to be accessed.

It says "failure in long-term planning" by HMRC means 42% of eligible 18-20 year olds have not drawn on their savings.

An HMRC spokesperson said they had notified young people before their account matured.

The chair of the Public Accounts Committee, Dame Meg Hillier, said that while these accounts were a vital "financial jump start" to adulthood, the scheme so far had not achieved that ambition.

Under the Labour government policy, any child born between 1 September 2002 and 2 January 2011 was eligible to receive at least £250 in a savings pot, which they could access as soon as they turned 18.

An average account contains £1,900.

However, according to MPs, poor planning by HMRC, a lack of engagement with account holders and barriers accessing savings meant that many from low-income backgrounds were missing out.

Children who lack capacity were particularly affected, with an estimated 80,000 having to rely on their families to go through a lengthy, often costly court process to access their savings.

Harry is one of those 80,000. His mum, Ramandeep Kaur, has saved more than £7,000 in his savings account - assuming he would be able to access it like his older brother.

But, she has been told the only way 16-year-old Harry, who has Down Syndrome and a love of Bollywood dancing, can access his money is if she goes through the Court of Protection.

"I don't know what to do to be honest, the money will mean so much to Harry - but at the same time the bureaucracy, cost, and overall impact of the legal implications is huge.

"I saved for my son, like I did for his brother - the whole system is wrong if it deprives Harry of what is rightfully his."

The committee also found that trust fund providers were not only failing to keep customers informed, they were also charging fees - up to £100m a year - just to passively manage the accounts.

More than 800,000 accounts belong to people from low-income backgrounds - prompting concern that those who need the money the most were not able to access it.

The committee said that HMRC and trust fund providers - such as building societies and banks - must do more to ensure that young people are aware of their savings and provide support to help them access their money.

A spokesperson for HMRC said that every 16-year-old was sent information about finding their Child Trust Fund with their National Insurance letter, and that they regularly kept account holders up to date -but anyone "unsure" about their situation should also contact their bank or building society.

Update 24 August 2023: This article was amended to give the exact start and end dates of Child Trust Fund eligibility.

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