An Overview of Unclaimed Child Trust Funds
The Child Trust Fund (CTF) is a government run fund designed as an investment for children. The fund no longer runs but many parents are unaware that if they fulfil certain requirements they can still claim trust fund vouchers for their children.
What is the Government Child Trust Fund?The Child Trust Fund was set up by the government in order to give children a financial boost. The fund provides a financial amount to children of parents who were in receipt of child benefit. The Child Trust Fund no longer operates to provide money for children born after the 2nd January 2011. Many parents have read media reports that the Child Trust Fund has now shut down. But this is not entirely the case and parents can still claim from the trust fund for their children.
The Amount Available Through the Child Trust FundThere is a difference in the amount of child trust available depending on certain stipulations. To be eligible for the £250 Child Trust Fund a parent must have received child benefit or the European Union family benefit before the 2nd August 2010. The child must also have been born on 1st September 2002 or after, but before 3rd January 2011. To be eligible for the £50 Child Trust Fund the parent must have received child benefit at any point between 3rd August 2010 and 3rd January 2011. The child must also have born on 1st September 2002 or after, but before 3rd January 2011.
How the Child Trust Fund Is PaidThe Child Trust Fund of either £50 or £250 is paid out in the form of a voucher. This money is tax free and a savings and investment account can be opened for the child with this voucher. Once the account has been opened the money cannot be touched by anyone except the child when they reach the age of 18. Parents can place up to £1200 into the child’s savings and investment account each year. The money placed into the account will not affect other benefits paid to the parent, such as Tax Credits.
Unclaimed Child Trust Fund VouchersMany people who are eligible have still not claimed their Child Trust Fund vouchers. Even while the scheme was officially open a huge number of parents did not claim this asset. This was due to being unaware of the scheme; in 2007 the media reported that around £12.5 million was unclaimed in Child Trust Fund vouchers. This meant that around 50,000 families in the UK had not claimed their trust fund vouchers. Parents who do meet the eligibility requirements can still claim these vouchers.
Additional Payments to the Child Trust FundNot only can claimants receive the initial Child Trust Fund voucher amount they can receive an additional payment. This payment should be received when the child reaches the age of seven. Again, there are eligibility rules and the child must have turned seven before 31st July 2010. The amount that will be received when the child turns seven will be the same as the initial voucher amount. This means if a child received £250 as the initial amount they will receive an additional £250 when they reach seven years old.
Future Government Plans for Children’s Savings PlansAlthough the Child Trust Fund is no longer available to children who were born after the 2nd January 2011 there are plans for a new children’s savings account. The government intends to implement a Junior Individual Savings Account (Junior ISA). This is scheduled to come into effect in the autumn of 2011. The Junior ISA will work as a tax free savings and investments account for children. Although the present Child Trust Fund has closed those who have already set up a CTF tax free account can still place money into this account as normal.
Any parents who do meet the eligibility requirements for the Child Trust Fund should make sure they claim the vouchers that they are due. Trust funds are a great way to make children financially aware from a young age. The Child Trust Fund is one more of the many government benefits that claimants miss out on every year in the UK.