Almost two million children could have no idea they have hundreds sitting in secret savings account set up by the Government
1.9million Child Trust Funds were set up by the Government on behalf of children
NEARLY 2million children could have hundreds of pounds sitting in a savings account set up by the Government.
Figures show that around 1.9million Child Trust Funds (CTFs) were opened by the Government on behalf of children when their parents didn’t open one.
In 2005, Gordon Brown introduced CTFs to help parents get a head start on preparing for their child’s future.
The policy meant that anyone born between September 1, 2002 and January 2, 2011 could receive a CTF voucher.
This was worth between £50 and £1,000, but parents and friends could build on this cash pot by adding to it.
There are three types of CTF account - cash, stocks and shares, and stakeholder accounts.
If parents didn't open the account themselves, then you'll have a stakeholder account, which is mainly made up of index tracking funds, which follow the fortunes of companies in the FTSE 100 or FTSE All-Shares, for example.
Kids can take over the running of the account from age 16, although they can't withdraw the cash until they're 18.
This means they can switch providers, transfer to a Junior Isa and change from a cash based product to a stocks and shares based product or vice versa.
But as many of the recipients will be turning 17 this year, stakeholder account provider OneFamily is urging families to track down the accounts.
UNTAPPED FORTUNE
It comes as children could come into a collective windfall of £4.7billion, according to research from BMO Global Asset Management.
The investment company reckons that's an average of £11,800 in so called "shares" or "fund" accounts and an average of £4,500 sitting in stakeholder accounts - based on the amounts saved in its own CTFs coming to maturity.
It's also done the maths on cash accounts and estimates there's an average of £353 in these CTF accounts.
OneFamily, for example, estimates that there's an average of £2,175 in its CTF accounts - less than in those saved with BMO.
How do I recover my kid's Child Trust Fund (CTF)?
HERE's how to recover CTFs:
- Check if your child has one: Your child must have been born between September 1, 2002 and January 2, 2011.
- Log-in on the HRMC website: You need to sign , or sign up for an account.
- Enter your details: Fill out a form with your child’s details - you'll need to be the parent or legal guardian of the child.
- When will I hear back? HMRC will get back to you, usually within 15 days.
HMRC says 72,000 people have used its Government Gateway service to track down lost CTFs.
The Sun found last year that in total, 6.3million CTF accounts were opened - 4.4million of these by parents on behalf of kids, leaving 1.9million accounts "secret accounts".
Currently, you can save £4,368 a year in your CTF.
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Ross Duncton, managing director and head of direct at BMO Global Asset Management, said: “Just as millions of people hear from pension providers as they approach retirement, Child Trust Fund providers will be contacting older teens directly over the next year.
"This ongoing process is just the start of a collective windfall – we estimate the first wave collectively equates to £4.7billion between now and 2020."
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