For many families, a child trust fund is easy to forget about until the account starts to matter. That moment often arrives at age 18, when the money becomes available and the scale of the payout can come as a surprise.
All children born in the UK between September 2002 and January 2011 were given a child trust fund. Yet despite that universal start, about £1bn has still not been claimed.
One parent recalls making a small but steady contribution in 2009, paying £10 a month into a child trust fund account. At the time, it may have felt like a modest amount. Nearly 18 years later, the combination of those payments, the original government contribution and stock market performance means the account is now worth about £10,000.
That kind of sum can be a welcome windfall for a young adult who has just gained access to the money. But it can also create uncertainty. For many, this is the first time they have had to decide what to do with a relatively large amount of cash. Saving, spending, or investing the money all become options, and the choice can feel daunting.
A government scheme that still matters
Child trust funds were created to give children a financial asset from an early age. Although the scheme ended years ago, the accounts are only now reaching maturity for those born in the final years of eligibility. That means a growing number of 18-year-olds are suddenly receiving money they may never have thought much about.
The fact that so much money remains unclaimed suggests that many people do not know they have an account, or have not yet tracked it down. For those who do have access, the next step is deciding how to use the funds in a way that fits their circumstances and goals.
What happens at 18?
Once the account holder turns 18, the child trust fund is theirs to manage. For some, that may mean withdrawing the cash. For others, it may be a chance to keep the money aside for a future purpose, such as education, a deposit, or building an emergency fund.
The question is not just what the money is worth today, but what it could do over time. A windfall at 18 can be tempting to spend quickly, but it can also provide a useful financial head start if handled carefully.
As more of these accounts mature, the issue is likely to become more common. Families who have been paying in small amounts for years may see the result of that patience at exactly the point when a young adult is first learning to make financial decisions for themselves.
For the young people receiving these payments, the challenge is simple to state but not always easy to answer: what should you do next?
