Almost a million young adults are owed a share of a massive £1.7billion cash pot that is waiting to be claimed.
According to MPs, they are entitled to an average of £1,900 each, which was invested for them in child trust funds.
The long-term tax-free savings accounts were available for children born between September 1 2002 and January 2 2011. They are able to access the money, which was topped up by the government, when they turn 18.
However, the Public Accounts Committee found that many account-holders do not know about their savings or have lost track of them.
It blasted the inaccessibility of funds, saying officials “may as well have buried these billions of pounds on a desert island”. Some 42% of 18-to-20-year-olds have not claimed the savings in their matured accounts.
Self-employed Brits have just weeks left to submit tax return or risk £100 fine
The long-term tax-free savings accounts were available for children born between September 1 2002 and January 2 2011 (Getty Images/iStockphoto)The MPs warned that as around 887,000 CTFs - or half of all accounts - were for children in low-income families, it is likely that much of the unclaimed money belongs to young people from backgrounds who need it most. They also said CTFs are not easily accessible for the families and carers of children and young people “lacking mental capacity”.
HM Revenue & Customs (HMRC) must do more to find and contact those young people, many of whom are from low-income backgrounds, MPs said.
Dame Meg Hillier, chair of the committee, said: “The aims behind Child Trust Funds are laudable - for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits.
“But given how poorly planned and promoted this inaccessible scheme became, for many young people HMRC may as well have buried these billions of pounds on a desert island for them to find. Schemes like these need careful nurturing and partnership working to flower into successful projects.”
She added: “Our inquiry heard a world of difference can be made to care leavers in particular, with Funds acting as a jump-start into adult life. In an ongoing cost of living crisis, our young people need every bit of support we can give them. HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be.”
An HMRC spokeswoman said: "Every 16-year-old is sent information about finding their Child Trust Fund with their National Insurance letter. We also regularly remind people how to check if they have an account.
“The banks and building societies managing the funds are also responsible for communicating with account holders. We would encourage anyone unsure about their situation to get in touch with their bank or building society as well.
“People can easily locate their Child Trust Fund accounts online by using the 'Find my CTF' page on GOV.UK.”
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