- In six months the first child trust fund holders will turn 18 years old, meaning they can take control of their accounts
- OneFamily is the largest provider, looking after one in four accounts
- The average amount held in a child trust fund for children born in 2002 is around £2,100
- One third of teenagers do not know what a child trust fund is
- Figures suggest that up to 60% of parents and teens could have lost track of child trust funds, having not added funds since the start of the scheme
- With the scheme coming to an end, this anniversary gives parents a timely opportunity to track down their child trust fund via the OneFamily online tool
With just six months to go until the first funds mature, OneFamily has revealed that around a third of teenagers are unaware that they are due to receive a windfall, and 60% may have lost track of their accounts altogether.
The friendly society wants to help teenagers and their parents to find their missing money and is urging them to get online and check out its OneFamily child trust fund tool. This will help them to locate the provider that is holding their account, so that they can be reunited with their 18th birthday nest egg.
Child trust funds were awarded to every child born between 1 September 2002 and 1 January 2011. On Tuesday 1 September 2020, the first recipients will be eligible to access their funds – just six months from today. The average OneFamily account for teens turning 18 years old currently holds around £2,100, although many have substantially more.
However, figures from OneFamily suggest that even as the first accounts approach maturation, a number of parents and teens may have lost track of their child trust funds, with 60% remaining untouched since the start of the scheme. Recent research also found that a third of teenagers don’t know what a child trust fund is .
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. Child trust fund holders and their family and friends can still save money into a child trust fund, from as little as £10 a month to up to £4,368 a year.
The government gave vouchers to over six million children and, for those turning 18 this year, the majority would have received £500 – with a £250 voucher when the scheme started and an additional £250 voucher when they turned seven. If the child came from a low-income family, they could have received up to £1,000. Younger account holders will have had an investment of between £50 to £500, depending on their age.
Parents could invest with the child trust fund provider of their choice. If they didn’t invest the voucher, the government partnered with several providers to do so on their behalf. This meant that even if parents did nothing at the time, no child would miss out. These saving pots may have a significant sum in them.
Jon Lee, Head of Investment Proposition at OneFamily said:
“This September we estimate that more than 75,000 teenagers will turn 18, the majority of whom will have a child trust fund in their name.
“These accounts were taken out a long time ago at a busy time in the lives of their parents; after all they’d just had a baby and probably had other things to think about! People will have also moved home, sometimes several times, so it’s not surprising that they could have lost track of where their trust fund was invested.
“However, we want to do our best to reunite teenagers with their missing money and the easiest way is through our online child trust fund tool. They can then decide if they want to build up their nest egg further by transferring it to an Adult ISA or a Lifetime ISA – depending on their needs. There’s no need to change it right away, it’s definitely worth giving it some thought, but these options may work out better for savings in the long term.
“The upcoming milestone also provides a great opportunity for teens and parents to talk about the different options for saving, and money more generally. By talking openly about money, families can help to establish good saving habits that will help teenagers with their future plans as they grow older.”
To track down a child trust fund parents can use OneFamily’s child trust fund tool. To find out more about OneFamily child trust funds visit: onefamily.com/child-trust-fund/ where parents will find a number of videos and tools