A million children could be missing out on up to £1,000 in tax-free savings sat in forgotten accounts, according to new research by The Share Centre.
Six million Child Trust Funds accounts were opened while they were available, between September 2002 and January 2011.
And, one in six of these – containing a combined £1billion – has been labelled ‘addressee gone away’, effectively meaning they have been forgotten by parents, the data claims.
Below, This is Money explains what they are and how to reclaim the cash for your child.
Forgotten savings? One million Child Trust Funds have been lost, containing a £6bn
According to The Share Centre, those who could benefit from the money the most are in fact the most likely to have lost track of savings in their name.
It stockbroker says 33 per cent of accounts held by families receiving Child Tax Credit had been ‘lost’, a total of 400,000 accounts.
These have a combined value of £600million, according to its calculations.
What is a Child Trust Fund?
Child Trust Funds were introduced in 2002.
The Government set them up to give kids a head start with a savings account and a pot of cash they could access when they reached adulthood.
It paid parents a £50 or £250 voucher to use to open the account, depending on when they were opened, plus a further deposit aged seven.
There were three options under the Child Trust Fund umbrella, a stakeholder, share or savings account, all of which came tax-free.
WHAT’S A JUNIOR ISA?
Junior Isa can be opened by parents for kids under the age of 16.
Similarly to a standard Isa account, both stocks and shares and cash Isas can be opened under the Junior Isa wrapper.
You can currently squirrel away up to £4,260 in an account each tax year.
Compare the best rates using our Independent Savings Tables.
Parents can currently add up to £4,260 per year (between each birthday).
Some children were also eligible for extra payments from the Government under the scheme outside of the annual limit.
The scheme closed to kids born after January 2 2011, replaced by Junior Isas, which do not come with a lump sum to open it with.
Those who already had a CTF could carry on making deposits.
In April 2015, the Government opened Child Trust Funds up for transfers out to Junior Isa, after fierce campaigning by our sister title Money Mail.
The major benefit of moving was the increase in choice in investments.
These had dwindled as fund houses preferred to concentrate on the new Junior Isa’s instead.
If you didn’t transfer a Child Trust Fund to a Junior Isa, the cash will be locked up until the child gains access at 18.
Once they reach the age of 16 however, young people can manage the account themselves.
Could your child be owed money?
Child Trust Funds were eligible for all children born between September 1 2002 and January 2 2011.
This September, therefore, the oldest of these accounts will have been opened 16 years ago.
Teenagers or their parents can locate a lost account by contacting HM Revenue and Customs.
The first step is to create a Government Gateway ID if you don’t already have one of these.
To do this you will need your National Insurance number plus a piece of evidence to support your identity, for example a passport or payslip.
Once you have signed in, you will be able to choose whether you are the parent or guardian or the child themselves who holds the account.
If it’s your child you are checking for, you will need to give some basic details such as name and date of birth.
How long will it take to find a forgotten account?
Once you send off your request it will take around 15 days to get a response.
This will include details of where the Child Trust Fund is held. You will then need to get in contact with them separately to access your account.
The Share Foundation website has a helpful list of all of the main providers managing Child Trust Funds and their contact details.
HOW TO FIND LOST SAVINGS AND BANK ACCOUNTS
There are free tracing schemes that can track down long-forgotten bank accounts and savings for you.
The mylostaccount.org.uk tool is run by British Bankers’ Association, Building Societies Association and National Savings and Investments.
By filling in the online form, it will therefore turn up all lost bank, building society and NS&I accounts with one search.
These accounts are usually labelled ‘lost’ by the providers that hold them, but all the funds will still be yours, plus any interest you are owed.
What about investments?
There is a database you can search for lost investments, pensions and life insurance policies.
The Unclaimed Assets Register, run by Experian, searches 76 different providers. It will cost you £25 to run a search though.
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