As Elle Middlemas neared her 18th birthday, she became curious about the possibility of having a child trust fund (CTF), a government-backed savings initiative for children born between September 1, 2002, and January 2, 2011. This fund can be accessed once the individual reaches adulthood.
However, her search for information quickly hit a snag. Uncertain if she was entitled to any funds, she found little assistance online, and an email inquiry to HM Revenue and Customs (HMRC) yielded no results.
“I had no idea what was going on, especially since my mother passed away when I was 11,” explained Middlemas, a college student residing in Whitby. “My sister, who is 21, had looked for three years without success, so we assumed there was nothing for us. I felt really disheartened seeing my friends with theirs.”
Elle and her sister are among roughly 758,000 individuals in the UK aged 18 to 23 who have not claimed their child trust funds. It is estimated that about £1.5 billion remains in unclaimed accounts belonging to young people, particularly those from disadvantaged backgrounds, who are unaware of the funds’ existence.
There are increasing demands for these funds to be automatically released to account holders when they turn 21, which experts believe could provide immediate financial support of up to £286 million to those who need it the most.
It was only six months after her birthday, following a conversation with a friend’s parent, that Elle learned she was indeed entitled to a CTF, even if no contributions had been made by her parents. This prompted her to resume her search, and she discovered the Share Foundation, a charitable organization working to reconnect young individuals with their CTFs. She soon located her NatWest account, which held funds in her name.
“I found £700 in my account and was baffled. How did this money end up there?” she remarked. “My sister also had a fund and was completely unaware of how to access it.”
Elle intends to use the funds to support her upcoming university expenses or to invest. Her sister has applied hers towards clearing some debts. “We are incredibly thankful. This will help us advance in life,” she stated. “Everyone eligible should be able to access their funds without the lengthy process I went through.”
The Child Trust Fund program was initiated by the Labour government in 2005 to encourage savings for children’s futures. All children born in the UK between September 1, 2002, and January 2, 2011, were granted a CTF, starting with a £250 government contribution, with an additional £250 for children from low-income families or those in local authority care. The accounts also accrue any gains until the holder turns 18.
The program aimed for parents to manage the funds, allowing them to add up to £9,000 annually. If a parent did not set up an account within a year of the child’s birth, HMRC would establish one on their behalf. The initial government contributions were invested in the stock market, and the average CTF value today stands at approximately £2,200.
Currently, two-thirds of the over 6 million CTF recipients are over 18 and eligible to access their funds, with HMRC-managed accounts comprising 28% of total CTFs.
The North East of England has the highest proportion of HMRC-allocated accounts, valued collectively at £48 million. Across the UK, accounts belonging to individuals from the 15% most disadvantaged families have an average worth of around £2,900.
According to Gavin Oldham, CEO of the Share Foundation, the CTF initiative is failing to meet its objectives due to poor communication, insufficient financial education, and a lack of policy focus. The charity is contemplating a judicial review to compel the government to act on releasing unclaimed funds.
Oldham noted that the charity has successfully connected over 100,000 accounts to young adults, but the vast number of unclaimed funds remains a significant challenge. “It is puzzling that a government expressing concern for youth poverty is not doing more to fulfill the promise of the CTF scheme introduced by the previous Labour administration,” he added.
The Share Foundation advocates for the automatic release of HMRC-allocated accounts when individuals reach 21, which could potentially release around half a billion pounds, with £350 million benefiting low-income young adults. They propose that this could be managed through existing systems such as benefits, payroll, and student loans.
“We could pursue a lengthy legal battle, and it might succeed, but that could delay access for years,” Oldham emphasized. “These young people should not have to wait to claim what is rightfully theirs.”
The charity is also calling for a new initiative designed specifically for young individuals from low-income backgrounds, incorporating a financial literacy program that would enable them to contribute to their funds through educational activities.
Laura Kyrke-Smith, Labour MP for Aylesbury, remarked that while the child trust fund initiative was established on solid principles, many accounts have become difficult to trace or access, leaving substantial sums unclaimed. She criticized the system as “confusing and opaque,” urging the government to enhance transparency and actively assist in locating account holders.
An HMRC spokesperson stated, “We are committed to directly informing every eligible young person about how to locate their child trust fund. We also raise awareness through social media, broadcast interviews, and offer an online tool to assist in tracing accounts. Financial institutions managing these funds have a responsibility to communicate with account holders as well.”
