Child Trust Funds Accounts Stuck

According to a new report from the Institute for Public Policy Research, millions of pounds are stuck in around 80,000 Child Trust Funds (CTF) accounts.

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The CTF scheme was introduced in 2005 and allowed eligible families to contribute up to £1,200 into an account for each child. It was designed as an extra savings vehicle for younger children and teenagers. The charges were also subject to various tax-free benefits and incentives.

However, after the scheme was closed in 2011, the IPPR found that many parents who opened CTFs on behalf of their children may have forgotten about them or not be aware they even exist. As a result, millions of pounds are sitting idly in these accounts, with many of the tax benefits being unclaimed.

The IPPR report estimates that around 80,000 CTFs still open but not currently active, with a total value of £64 million. From this figure, over £14 million is invested in government bonds and over £17 million is held in cash.

The report recommends that the government extend the deadline for parents to access CTF money until their children reach age 25 or consider making parents aware of the CTF scheme when their child reaches adulthood. The report also calls for investigating whether dormant account fees could be used to cover costs associated with raising awareness about CTFs.

It’s clear from this report that millions of pounds could be available to families who may not even know it exists. Parents must be aware of the CTF scheme so they can make the most of their savings and receive all the tax benefits associated with these accounts.

This is another example of financial education’s importance, especially regarding investments like Child Trust Funds. We must ensure that young people have the knowledge and skills to make informed decisions about their money. With this in mind, we must keep raising awareness of the benefits of financial literacy and investing in our children’s future.

What strategies could the government implement to make parents more aware of Child Trust Funds and encourage them to access their money?

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