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Children’s savings and CTFs

This UK Savings Week blog looks at children’s savings accounts, specifically Child Trust Funds.

Encouraging kids to have a good savings habit is one of the most valuable gifts we can give to the younger generation.

There are many savings accounts parents and guardians can open for children, including Junior ISAs and their precursor, Child Trust Funds (CTFs).

The holders of these CTFs are now reaching age 18, when the accounts mature. While it might be tempting to spend whatever money has accumulated, it is a good idea for these young savers to think about what to do with their savings, including what they could do in the future if they kept some, or all, of the money in savings.

Raising the profile of Child Trust Funds to all young people turning 18 and their parents or carers

A Child Trust Fund is a savings account opened for all children born in the UK between 1 September 2002 and 2 January 2011.

If parents/carers didn’t open a CTF on behalf of their child, then the government (HMRC) did so. Building societies are the providers of many cash CTF accounts.

Government made an initial deposit into the account (some devolved governments added more) which parents, carers or family members were free to add to, up to certain limits, while the child was growing.

 At age 16, young people can take over ownership and control of their CTF; at age 18, when their CTF matures, they can access the funds, either withdrawing the money or moving it to another account.

The first CTFs started to mature in September 2020. Since then, thousands have matured every week. This process will continue until 2029.

Maturing CTFs are likely to contain on average several hundreds of pounds in savings. In the current economic climate, it is vital that all young people trace their maturing CTF, if they don’t already know their account details, and access the funds in them; however, many young people are still not doing this.

Our MoneyHelper, offers guidance in English and Welsh on how young people can trace their maturing CTF and how they can use at least some of the funds to continue saving and build financial resilience throughout their adult lives. 

Suffolk Building Society describes its process to help young people understand what they might expect when their CTF matures

At Suffolk Building Society we write to the Registered Contacts of Child Trust Funds approximately 8 weeks prior to maturity.

This letter encourages parents to talk to their children about how a good savings habit can help them achieve their goals for the future, and the tax-free options available on maturity. This letter also asks the account holder to provide up to date personal information and proof of identity ready for maturity.

In the absence of an electronic identity check, most providers will rely on traditional forms of verifying identity.

At Suffolk Building Society we accept a range of documents including provisional/full driving licence, passport and birth certificate.

Approximately 4 weeks prior to maturity we write directly to the account holder for their instructions.

They can choose to continue saving into the Society’s tax-free Stepping Stone ISA for young savers aged 16-20, transfer their matured CTF to another ISA provider, or close their account.