The Share Foundation continues to urge government to automatically release matured HMRC-allocated Child Trust Funds
While HM Treasury’s recent announcement — that it intends to write to young people aged 21who have yet to claim their Child Trust Funds — is a step in the right direction, there needs to be significantly more focus on unclaimed HMRC-allocated accounts.
The UK Government provided £2 billion worth of funds for opening a Child Trust Fund account for every child born in the UK between 1st September 2002 and 2nd January 2011. If the child's parents or guardian had taken no action by their first birthday, HMRC automatically opened the account for them: 28.4% of accounts were opened that way (1.78 million accounts)
The Government last week announced plans to contact thousands of young people aged 21 about forgotten Child Trust Funds (CTFs) in a bid to reunite account holders with their accounts. However, The Share Foundation believes that while this is a step in the right direction, it is not going far enough.
Chair of Trustees Gavin Oldham is disappointed that there is no focus on HMRC-allocated accounts in the Government’s announcement. As the Government was responsible for opening these accounts, it should also be their responsibility to deliver them. The proportion of low-income recipients is 70% higher for HMRC-allocated accounts than for those accounts which were opened by the child's own family: so, there’s a real concentration in terms of disadvantage in this segment, which also has the highest proportion of unclaimed accounts.
It is also questionable whether these letters will result in action. If someone is not aware they have an account, will they act or simply ignore the letter, thinking it does not apply to them?
If the Government agreed to automatically release HMRC-allocated CTFs at 21 years of age, £369 million would be in the hands of low-income young adults forthwith. And with all CTFs coming into maturity by 2029, delivering them should now be a key priority for the Government.
Both the former Conservative and the present Labour Governments have so far resisted the introduction of an ‘automatic release’ process at 21 years of age for unclaimed HMRC-allocated Child Trust Funds, citing headline reasons of law, data integrity and operations. It is clear, however, that the principal challenge is one of prioritisation: the fact that current PAYE and Student Loan contact details will now be used to write these letters is an indication that these headline reasons are not insuperable.
The Share Foundation, which has linked over 120,000 young adults to their accounts through its free findCTF.sharefound.org search facility, wants to work co-operatively with the government to move this issue forward and to enable these young adult owners to have access to their Child Trust Funds. Thus far, it has had to resort to a proposed legal ‘Judicial Review’ process to achieve any element of substantive Government involvement. So, while HM Treasury’s plan to write to 21 year-old owners of unclaimed Child Trust Funds is an indication that the issue is now being taken more seriously, there is much more to do to ensure that low-income young adults do not miss out on their birthright.
Contact: Gavin Oldham OBE 07767-337696