A lesser known fee with Child Trust Funds could see people missing out on hundreds of pounds.
The account is available to young people aged between 18 and 22, with the average account holding a substantial £2,212. These tax-free savings accounts were established for every child born from 1 September 2002 to 2 January 2011, with an initial £250 government deposit.
Account control is available from age 16, and funds can be accessed once individuals turn 18. Unlike government-held funds, these savings are with banks, building societies, or other financial institutions and remain there until withdrawn or reinvested.
For those aware of their provider, direct contact is advised; otherwise, the government’s online tool can assist in locating the account using a National Insurance number and date of birth.
Some firms are offering to track down Child Trust Funds on behalf of the account holders – but they charge for the service, with fees of up to £350 or 25% of the account’s value. However, using one of these agents can reduce the amount of money received, and the process often takes longer.
Account holders still need to provide the same information to the agent as they would if they were searching for the account themselves. According to Gavin Oldham of The Share Foundation, “If you are 18-21 years old, the government would have put money aside for you shortly after birth. This investment would have grown quite a bit and it’s in your name. T
“The Share Foundation has linked over 65,000 young people to their Child Trust Fund accounts. It’s easy and free to find out where your money is. Go to findCTF.sharefound.org or GOV.UK to locate it today”.
Fees costing up to £100s
Savings in Child Trust Fund accounts chiefly held by banks, not the government. This means that they are subject to bank charges and fees which can slowly pick away at the savings left in the account, meaning less cash when it’s finally withdrawn.
One Child Trust Fund customer, Max Prince, told the BBC that his account was only left with £12.39 when it came to withdrawing the cash. The investment firm managing the account, Columbia Threadneedle, had applied a £30 annual charge which ate away at the majority of the savings.
However, a spokesperson for the firm said that its funds “require customers to actively make their own investment decisions and without authorisation and communication from customers, we are unable to take action on their behalf”.
For more information on Child Trust Funds and how to access savings, visit GOV.UK.