Child Trust Funds Maturing for First Time: Here’s What You Need to Know

Millions of teens will be coming into their own stash of money starting in September.

Child Trust Fund (CTF) accounts will be maturing for the first time for teenagers who are turning 18.

The first “child trust fund babies” who turn 18 in September will receive the first installment of the multibillion-pound disbursement expected to go to a total of 5.5 million teenagers, The Guardian reported. 

Windfalls for teens will start in September and will continue until January 2029. Each month, about 55,000 young people will be empowered with a large sum of money authorised to them. 

Current 9 1/2-year-olds will be the last to receive their child trust funds in 2029, according to The Guardian. 

CTF accounts, or “baby bonds,” were initiated in 2005. The CTF accounts’ funds have been maturing behind the scenes and they are finally ready to land in the laps of millions of teenagers. 

Approximately 6.3 million CTF accounts have been created since 2002, according to Express. Parents and guardians have set up somewhere around 4.5 million, and another 1.8 million have been set up by HM Revenue and Customs (HMRC).

This means the money in CTF accounts set up by HMRC is going to children who do not know there is an account with their name on it.

Children born between 1 September 2002 and 2 January 2011 who have a live Child Benefit claim were the lucky group to have CTF accounts set up for them.

A child trust fund is a long-term savings account for young people, according to The Guardian.

The CTF accounts are tax-free, and £9,000 can be added each year. Neither the account’s income nor profits are taxed. Anyone can deposit money into a CTF account.

When the child turns 16 they can gain control of the account, and when they turn 18, they can finally access the money, the Sun reported.

Child trust fund accounts were created to bolster positive money habits among young people. The CTF accounts were meant to encourage saving habits.

When the child is 16, parents and guardians can allow the child to maintain the account, according to government guidelines.

When the child reaches the age of 18, CTF accounts are finally matured and beneficiaries can obtain or transfer the money. Eighteen-year-olds have access to do as they please with the CTF accounts.

From September of this year until 2029, there will be more than 700,000 child trust fund accounts maturing every year, the Sun reported.

Many CTF accounts are held by financial service firms. The child trust fund accounts are not kept by the HMRC.

After the coronavirus pandemic has created financial problems for many people, the child trust fund accounts are expected to be fully embraced, The Guardian reported. The money that teens are potentially getting can assist with university costs or can create a savings cushion for teens’ futures.

“We want to make sure all young people can access the money which has been set aside for them, to invest in their future and continue a savings habit, as they turn 18,” Economic Secretary to the Treasury John Glen said. “If you’re unsure if you have an account or where it may be, it’s easy to track down your provider online.”

Parents or teens wanting to research where their account is being kept may use the online access tool provided by the HMRC.

The service can be accessed by teens, but it might be important for parents and guardians to be aware of where the CTF account is held as well.

Are you or your child about to turn 18? Did you know about the maturation of CTF accounts? Let us know in the comments.

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