“I’ve got a Child Trust Fund and I’m 18 soon, but I’ve no idea where to start!”

Don’t worry, you’re not alone – millions of Child Trust Funds (CTFs) were set up for children born between September 2002 and January 2011. It’s easy to have lost track of the policy if your parents have mislaid the paperwork, or you and your family may have moved in the years since the plan was first set up.

If your parents didn’t get the chance to set a plan up (looking after a new baby can be quite time-consuming!) then HMRC (Her Majesty’s Revenue & Customs) will have stepped in and done this on their behalf, but it could be with one of several different companies.  Your parent or guardian might just have forgotten they set it up for you, and also needs some information on what happens now you’re approaching your 18th birthday. 

Even if your family have continued to contribute to the plan and know what company (aka the provider of your CTF) it is with, there’s still a big decision for you to make on what to do with your money. 

What happens to my Child Trust Fund at 18?

When you reach 18 the plan will automatically end (also referred to as your plan ‘maturing’), which simply means you can access the plan and either reinvest the money into a new savings plan, or receive your Child Trust Fund pay out, if you choose to take some or all of the money.

As your birthday approaches, as long as your Child Trust Fund provider has the correct contact details for you, they’ll get in touch to explain what’s next, and give you an up to date value for your plan.

It’s important to remember that as soon as you turn 18, it’s solely your decision on what to do, but if you are new to thinking about savings and making decisions about your finances, it’s a good idea to discuss the options with your family, who may be able to offer guidance. There’s a range of options at this point, so it’s really important to consider them each carefully.

Your options at 18:

Depending on which company your Child Trust Fund is with, these options may vary slightly, but generally speaking you’ll have 3 choices;

Reinvest the money

If you want to continue saving for the future, starting to plan for getting on the property ladder could be a good option. With Halifax reporting in December 2021 that the average age of a first time buyer is now 32, you could decide to invest in a Lifetime ISA (LISA), and benefit from a government bonus of up to £1,000 each year, to help you get onto the property ladder that little bit sooner. From 18 to 32 you could benefit from a bonus of £15,000 if you saved the maximum £4,000 each year yourself.  That would give you a deposit of £75,000 even before any bonuses had been added!

Or if you don’t want to restrict your options to buying your first home or using the money for retirement (they’re the two things a LISA is designed for), you could choose a standard ISA instead. Once you’ve moved your Child Trust Fund across, you could decide to continue saving with a monthly direct debit payment into the plan, or pay in lump sums as and when you have them. You can decide whether to reinvest with your current provider, or switch the funds to an alternative company. 

Reinvest some / take some

If you want to continue saving but also want to use some of the money in the plan towards a first car, the cost of starting university or something else, then there’s the option to reinvest some of the money and take some of it. This can be any amount or percentage of the fund. 

This could be a good compromise if you’re keen to use some of the money now but your parents are keen for you to keep it invested!

Take the money

That first car you’ve got your eye on or helping with the costs associated with going to university may be exactly what your parents have always intended your Child Trust Fund to be for. In which case, it’s completely possible to withdraw the entire amount, and this will be paid to your bank account. 

Bear in mind the plan will have been set up by your parent or guardian so the company your fund is with may need to carry out some checks to confirm your identity before they’ll transfer the funds.

What if I don’t make a decision?

You’ve no doubt got lots of decisions to make at the moment and it’s an exciting time, planning your future. If you don’t get in touch with the provider of your CTF after they’ve contacted you about your plan maturing, it’ll simply become a Matured Child Trust Fund. No more money can be added to the plan. Your funds will remain with them until you get in touch to tell them what you’d like to do. But as soon as you’re ready to make your decision, the money can be paid to you or reinvested in an alternative product such as an ISA or Lifetime ISA. 

“My parents and I don’t know where my Child Trust Fund is. What should we do?”

Not being exactly sure which company manages your Child Trust Fund is a common problem and it’s easy to find your CTF and get the contact information for the provider who holds it. Even if your parent or guardian didn’t get around to investing the voucher they were issued with, after a period of time this would’ve been done on their behalf by HMRC.

Where is my Child Trust Fund and how do I find it?

It’s easy to find out which company holds your CTF by using the form on HMRC’s website. You need to have a Government Gateway ID which takes a few minutes to set up but then you can provide your details and HMRC will write to you within a few weeks with details of the company who hold your plan.  The form can either be completed by the parent or guardian, or the Child Trust Fund holder if you’re over 16.  That’s because from 16 you have responsibility for the plan, even though no money can be accessed until you turn 18.

HMRC advise that if the parent or guardian completes the form, they’ll need the child’s unique reference number, their child benefit number if child benefit has been claimed for them, and the name of the local authority if the child has ever been in care.

Once you’ve found out who your Child Trust Fund is with you should make contact with them to ensure they have your up to date details.  That way when they write to you ahead of your 18th, you won’t miss out on vital information about the value of your plan, your options and what to do next.

How we can help

If your Child Trust Fund is with Foresters Friendly Society you can call us on 0800 988 2418 and we’ll be happy to help.  Our lines are open Monday – Friday, 9am – 5pm. 

Member benefits are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.