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The 16th birthday of the child trust fund: £10 billion held in child savings accounts

Posted in: Products

  • This Saturday on 1 September the first child trust fund holders will turn 16 years old
  • OneFamily is the largest provider looking after one in four accounts
  • The average amount held in a child trust fund set up for children born in 2002 is £2,175
  • 16-year olds with OneFamily child trust funds have benefited from investment returns of 108.2% so even if parents haven’t topped up the accounts, they will have over £1,000 saved
  • With two to 11 years left to run OneFamily is urging parents to invest and take advantage of the great benefits on these accounts

This coming weekend marks the 16th birthday of the child trust fund, meaning that the children can start managing their accounts, and in two years’ time be able to access the savings. The average OneFamily account of children turning 16 this month holds a substantial £2,175.

Child trust funds were awarded to every child born between 1 September 2002 and 1 January 2011. The initiative, set up by the government, gave parents a head start in saving for their child’s future, as well as ensuring that every child arrived at adulthood with a nest egg, no matter what their background. Parents, family, friends and even the child themselves can save money into a child trust fund, from as little as £10 a month to up to £4,260 a year.

The government gave vouchers to over six million children, and for those turning 16 between now and end of July next year the majority would have got £500. If the child came from a low-income family, they would have received £1,000. Younger account holders will have had an investment of between £50 to £500, depending on their age.

Parents could invest with a child trust fund provider of their choice, and if they didn’t invest the voucher the government partnered with a number of providers to invest the voucher on their behalf, so even if parents did nothing no child would miss out. These saving pots now have hundreds and even thousands in them.

The money saved in a child trust fund can be accessed by the child at age 18 but from 1 September 2018, children turning 16 will be able to become the registered account holder of their child trust fund. To do this they will need to contact their provider, who in most cases will give them a form to fill in to make the change. Once the account has been updated the child will receive all communications about the child trust fund and they will be able to access any online account management that comes with the account and watch their money grow.

Steve Ferrari Managing Director of Child Trust Funds at OneFamily,

“In September alone, over 75,000[i] child trust fund children will turn 16, with the average amount held in an account with OneFamily of this group at £2,175, these children can expect a healthy nest egg to put towards their future plans.

“This group of children turning 16 this month, and over the coming year, will have done particularly well, partly due to the strong investment returns of 108%, more than doubling their initial investment since they were set up[ii], but in addition they are the group that got an additional voucher when they turned seven.

“There is still the opportunity to earn money on these accounts. We are urging parents to continue to invest into these accounts and if they are unsure of what has happened to their child’s child trust fund, or who it was originally invested with, to track it down.”

To track down a child trust fund parents can use the HMRC’s dedicated page. Parents will need to provide both their own information as well as that of their child, and once it has been submitted they should receive the information on where the child’s child trust fund is held within 15 days.

Find out more about OneFamily’s Child Trust Fund

[i] OneFamily managed 27% of the child trust fund market and has 20,369 account holders that will turn 16 in September 100% is 75,440.
[ii] The total return of the OneFamily Family Investments Child Trust Fund since inception.