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How to trace a lost Child Trust Fund

Some six million young people across the UK have a Child Trust Fund. But research suggests that more than one in six of them may have been lost.

If you know which provider your Child Trust Fund is with then the first step is to contact the company and ask for an up-to-date statement.

How many lost Child Trust Funds are there?

Figures from HMRC estimate that around 700,000 Child Trust Funds are dormant. Other analysis suggests up to one million accounts with holdings savings worth more than £600 million, could have the wrong contact details on them.

The first children who received a Child Trust Fund turned 16 in September 2018, and we’re urging those who have lost their accounts to track them down.

Child Trust Funds are a savings account which were given to all eligible babies born between September 2002 and 2 January 2011. As part of the scheme, every account was credited with up to £500 free from the Government, encouraging parents, relatives and friends to save tax-efficiently each year to boost their child’s savings. Parents, other family members, friends and even the child themselves can currently put aside a maximum of £4,260 a year into the fund.

Where did Child Trust Funds come from?

Child Trust Funds were a landmark innovation, designed to kick-start good saving habits and help parents get their children started.

Around a quarter of Child Trust Funds were automatically set up by HMRC as parents did not set up the account themselves before their child’s first birthday. Others will have got lost along the way over the years.

How to track down a lost Child Trust Fund

For those who have lost their Child Trust Fund entirely or are not sure whether their child has one, OneFamily are here to help. Head over to our dedicated page, enter your details and we’ll do the rest.

Finding a Child Trust Fund and starting positive saving habits should also stand your child in good stead when they come to start saving for themselves. Once a child reaches 16, they will be able to take over the running of the account, though they won’t be able to access any of the cash savings for another two years. The account matures when a child hits 18 and they are then free to save, invest or spend the money how they choose.

Parents should try to start educating their children in the importance of saving, because they could be set for a hefty windfall when their account matures – a parent who had saved just £25 a month since their child was born, along with an initial voucher of up to £5o0 from the Government, will have built a pot of nearly £6,000, plus any investment returns or interest, by the time their child reaches 18.

What happens when the child turns 18?

What their child does with the money depends on their circumstances. Once a child turns 18, they will have an even wider range of tax-efficient savings accounts to choose from. Those who think they might need to use the money in the near future can keep it safe in a cash ISA account, while those looking to invest for the long term might opt for an Investment ISA such as the Lifetime ISA. The fairly new Lifetime ISA could be a good choice for young savers hoping to get a foot on the property ladder.

These are tax-free savings accounts for those aged 18 to 39. Savers can put £4,000 per tax year into the account and the Government will top up the balance by a generous 25 per cent. The money is locked into the account until the saver reaches age 60, unless the cash is used as a deposit to buy a first home. The money can be accessed but there’s a charge for doing so. The Lifetime ISA was only launched in April 2017 so only a few providers are currently offering it.

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.