Hundreds of millions of pounds deposited in tax-free savings accounts that people can access when they reach adulthood are at risk of being forgotten by their holders, the National Audit Office (NAO) has warned.
The spending watchdog said estimates show more than a quarter of children’s trust funds (CTFs) have been left untouched for a year or more after their owners turned 18.
A CTF is a savings account for children born between September 1, 2002 and January 2, 2011 that can be accessed at age 18.
The funds help the people financially in early adulthood – but the NAO fears that accounts are at risk of being forgotten or lost from account holders.
It’s unclear how many children and young adults either don’t know or can’t find their CTF, the NAO said.
Gareth Davies, head of the NAO, said: “At a time of economic hardship for millions of people across the country, it is important that the government does enough to ensure young people know about and have access to their children’s trust funds .”
The Government paid more than £2 billion in CTFs for 6.3 million children born during the period.
Most children received around £250 each from the government at the start of their CTF, while children from low-income families or in community care received an additional £250.
Many CTFs have been invested in equities and shares, with the total market value of CTFs being £10.5bn as of April 2021.
Some of these belonged to young people aged 18 and over who had not unlocked their accounts.
As of April 2021, around 320,000 CTFs had matured in the seven months since the first CTF account holders turned 18 in September 2020.
Of these, 175,000 (55%) were claimed by the account holders and the accounts were closed, and 145,000 remained unclaimed.
Around £394million remained to be claimed in mature CTFs owned by young adults aged 18 and over as of April 2021, the NAO said.
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The NAO said HM Revenue and Customs intends to include CTFs in a communications campaign in 2023.
The NAO estimated that CTF providers – including banks and building societies – could collectively make up to £100m a year from account fees.
Public Accounts Committee chair Meg Hillier said people need to be proactive in getting reunited with their funds, adding that in a Cost of Living Crisisthe money could be “a vital lifeline for young people, especially those from low-income backgrounds”.