Zombieland: one in four Child Trust Funds identified as 'zombie' accounts
Press release - 23rd March 2015
- 1.5 million of the 6.3 million active Child Trust Funds have not received any contributions
- 1.4 million accounts could now have less than £250 in them at present, which means that they have actually lost money during the time in which they have laid dormant
Nearly one in four Child Trust Funds (CTF) have been identified as ‘zombie’ accounts that have been forgotten by parents and that have never been contributed to since they were initially opened.
Research[1] from Junior ISA provider Scottish Friendly has found that an estimated 1.5 million of the 6.3 million CTF accounts that were opened on behalf of children born between September 2002 and January 2011, have never had any additional funds put into them outside of the Government’s contribution.
In addition, an estimated 1.4 million CTF accounts could have less than £250 in them at present, which means that they have actually lost money during the time in which they have laid dormant.
Calum Bennie, savings expert at Scottish Friendly said:
Part of the problem is that many people never got engaged in the process in the first instance. Nearly one in three (30 per cent) parents did not make an active decision on where this free gift was going to be placed and instead left it up to the Government to appoint a provider. This has meant many of these accounts, which could hold over £400 million, may simply have been forgotten about.
The Government provided these children with free money to help kick start their future, but too many parents have squandered that opportunity by not engaging in the scheme. While not all families would have been able to add to their child’s account, it appears that many who could have made a difference, did not take advantage of the opportunity to build on the savings pot.
Following a widespread media and consumer group campaign, the Government announced last year that it will, from 6th April this year, give parents the option to voluntarily transfer any funds out of a CTF and into a Junior ISA (JISA).
Bennie, continued:
It’s never too late for parents to take back control and make a positive impact on their child’s nest egg. Lost Child Trust Funds can be tracked on the Department of Work and Pensions website and the new legislation coming in April will give more flexibility and choice on how this money can be invested. Taking positive action now could have a significant impact on the final sum a child will receive when they turn eighteen, allowing them an important head start in life and helping to teach them a valuable lesson on the importance of saving.
Lost Child Trust Funds can be tracked down here:
http://www.hmrc.gov.uk/tools/childtrustfundclaim/ctfaccount.htm
References:
- Research conducted by Reddot Research. Just over 2000 people were surveyed in February, 2015.