More than £1.7 billion in child trust funds (CTFs) to help young people financially in early adulthood has not yet been claimed, a cross-party panel of MPs has said.
The Public Accounts Committee (PAC), which scrutinises Government spending, raised concerns that many account holders do not know about their savings or have lost track of them.
Nearly a million young adults – or 42% of all 18 to 20-year-olds entitled to the money – are missing out on it, according to its report.
HM Revenue & Customs (HMRC) must do more to find and contact those young people, many of whom are from low-income backgrounds, the MPs said.
They also said providers, which are earning “very high” fees of up to £100 million a year for passively managing CTFs mostly composed of Government money, are not doing enough to link up forgotten accounts with their owners.
CTFs are long-term, tax-free savings accounts for people born between September 1 2002 and January 2 2011, which they can access when they turn 18.
Many children received around £250 each from the state at the time their CTF was started, while those from low-income families or in local authority care received an additional £250.
The average value of the unclaimed accounts is around £1,900 each, it is estimated.
The committee also said families and carers of young people lacking mental capacity are finding it costly and complicated to access CTFs.
Schemes like these need careful planning so that they are not forgotten at the point when they mature— PAC chair Dame Meg Hillier
PAC chair Dame Meg Hillier said: “The aims behind Child Trust Funds are laudable – for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits.
“But many young people are unaware that they have money waiting to be claimed.
“Schemes like these need careful planning so that they are not forgotten at the point when they mature.
“Our inquiry heard a world of difference can be made to care leavers in particular, with Funds acting as a jump-start into adult life.
“In an ongoing cost-of-living crisis, our young people need every bit of support we can give them.
“HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be.”
An HMRC spokesperson said: “Every 16-year-old is sent information about finding their Child Trust Fund with their National Insurance letter. We also regularly remind people how to check if they have an account.
“The banks and building societies managing the funds are also responsible for communicating with account holders. We would encourage anyone unsure about their situation to get in touch with their bank or building society as well.
“People can easily locate their Child Trust Fund accounts online by using the ‘Find my CTF’ page on GOV.UK.”
