In 2002 the Labour government set up ‘Child Trust Funds’ to encourage parents to save for their children and promote financial awareness.
This began with an automatic contribution from the government of £250 which was then paid again when the child reached seven, this was to be invested in cash or stocks and shares until the child turned 18. This was eligible to children born between 1 September 2002 and 2 January 2011.
If the child was born into a family with a low household income, then each of the two payments was increased to £500. In August 2010, those sums were reduced to £50, or £100 for those in low income homes.
In January 2011 those sums were stopped during the coalition government, but in the meantime six million young people were assigned these savings which could be topped up by their family, friends or the children themselves.
Now anyone turning 16 can start managing their own child trust funds for the first time, although some are not even aware that they have these savings.
Although they are unable to withdraw their savings until they turn 18, they will still be able to manage their fund and choose where there would like those funds to be held, giving them first hand experience of making decisions on their own money.
There is however a concern that there are many lost funds, as when parents/guardians did not open an account on their child’s behalf in the first year of birth, H M Revenue and Customs opened accounts on the child’s behalf. Typically, the fund could now be worth £1,600 and many children are not aware they have these.
If you would like to investigate this in more detail or you would like to check if you or your child have a child trust fund you can find out information by following the link below.
https://www.gov.uk/child-trust-funds
Full information on this story can be found here; https://www.bbc.co.uk/news/business-45367623