This month thousands of British teenagers will get access to Child Trust Funds in their name worth £1,000 or more and to some it will be a complete surprise.
The Child Trust Funds were the idea of Gordon Brown when he was Chancellor of the Exchequer in 2005. He launched the tax-free funds as a way to encourage parents to save for their children.
Every child born between September 2002 and September 2011 was given a £250 voucher – £500 if they were from low income families – which was topped up by a second voucher when they were seven.
The money was to be invested in a special account which could only be accessed when the child turned 18. Parents, family and friends could add to the pot if they wished, to a maximum of £9,000 a year, but even if they didn’t the accounts should still be worth £1,000 or more.
However, many of the 55,000 turning 18 this month will have no idea the money is there waiting for them. Some parents never told their children and forgot about it themselves like Kerry McWalter who heard about the scheme on social media.
She said: “When I found out, I was quite surprised. I wasn’t aware I had one. My mum had forgotten about it.”
She has since told a friend who found she too has an account she wasn’t aware of.
Parents or guardians were encouraged to set up accounts for their children with one of a number of providers when the vouchers were distributed, but 1.8 million didn’t do so leaving Her Majesty’s Revenue & Customs (HMRC) to do it for them.
In the case of children in care the accounts were set up by local authorities and have since been managed by The Share Foundation, a charity which is also helping others to track down their money.
The scheme was eventually scrapped by the Coalition government in 2011, but not before vouchers had been issued to 6.3 million children.
Approximately 700,000 children a year will turn 18 over the next nine years and they can either redeem their trust fund and spend the cash or continue to save for their future.
Accountants have estimated that a trust which wasn’t topped up could be worth between £1,000 and £1,500, depending on if it was saved as cash or invested in shares. Provider Unity Mutual says half the teens will receive more than £5,000, just over a quarter will get £20,000 and those with the maximum parental contribution and investment growth could produce almost £50,000.
For teens who have no idea where their money might be they can get help from The Shares Foundation.
Economic Secretary to the Treasury, John Glen, said: “We want to make sure all young people can access the money which has been set aside for them, to invest in their future and continue a savings habit, as they turn 18.
“If you’re unsure if you have an account or where it may be, it’s easy to track down your provider online.”