Child Trust Fund warning as 120,000 accounts left unclaimed - act now to receive money
Child Trust Funds (CTF) were introduced by the government back in 2005, and made available to children born between September 1, 2002 and January 2, 2011. Eighteen years later, it is thought the average fund is worth £1,000, but many accounts are holding significantly more. However, research from the Association of Financial Mutuals (AFM) has shown 120,000 Child Trust Funds are still unclaimed.
This could mean millions of pounds are currently sitting in dormant accounts, leaving teenagers and their parents out of pocket.
The AFM has now called on the government and the financial services industry to encourage young people to take control of their money.
In the meantime, the organisation has offered help to parents and teenagers who are now looking to manage the sum.
Martin Shaw, CEO of the Association of Financial Mutuals, has offered advice on the matter.
READ MORE: Child Trust Fund: Can you take money out of Child Trust Fund?
Once a person has found their money, it is important to take the time to decide what to do with the sum.
Parents have been encouraged to talk thoroughly with their teenagers about whether the money should be cashed in or reinvested.
However, the CTF provider or a financial adviser can also provide further perspective for those who need additional support.
Mr Shaw highlighted that interest rates are currently at record low levels, and therefore holding money in a bank account may not be the best idea.
Instead, parents and teenagers may wish to set particular financial goals with the money they have from their matured fund.
These goals can be important in life, such as a house deposit or paying off a student loan.
Further research undertaken by Unity Mutual found reinvesting in an ISA or into stocks and shares were some of the most popular options.
Mr Shaw added, speaking to teenagers: “You are the lucky group who will benefit from a lump sum that could make a significant difference to your life.
“I would urge any young person to think about their future plans and think about reinvesting the money in an adult ISA so the money can grow further.
“Another option is to think about investing in yourself, such as university or a training qualification, as this will be paid back in the future.”
Finally, for those who wish to spend, it is vital for limits to be set.
Mr Shaw stated teenagers should also be making a plan on what the rest of the money should be used for, to avoid the temptation of spending it all.
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