Nearly 430,000 18 to 21-year-olds with an unclaimed child trust fund (CTF), worth an average of £2,000, are being urged to claim their cash.
HM Revenue and Customs (HMRC) is encouraging young adults to claim the “pot of money with their name on” as part of UK Savings Week, which runs until Sunday.
CTFs are long-term, tax-free savings accounts and were set up for children born between September 1 2002 and January 2 2011.
Many children got around £250 each from the state at the time their CTF was started, while those from low-income families or in local authority care received an additional £250.
Some young adults may have forgotten about their accounts or be unaware one was set up for them.
Funds can be withdrawn once the child turns 18.
Young adults and parents can search on gov.uk to find out where their CTF account is held.
Angela MacDonald, HMRC’s second permanent secretary and deputy chief executive, said: “Many 18 to 21-year-olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their child trust fund is a pot of money with their name on.
“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their child trust fund. It could make a real difference to their future plans.”
There are 5.3 million open CTF accounts. Young people aged 16 or over can take control of their own CTF, although the funds can only be withdrawn once they turn 18.
More than 500,000 matured CTF accounts have been claimed or transferred into an Isa since the oldest savers in the scheme turned 18 in September 2020.
Families can continue to pay in up to £9,000 a year tax-free into a CTF until the account matures. The money remains in the account until the child withdraws or reinvests it into another account.
Sharon Davies, chief executive of Young Enterprise, said: “We would encourage all young people to investigate if they have money which is unclaimed in a child trust fund and to use it wisely.
“A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult Isa or put towards driving lessons, education or starting a business.
“The money in a child trust fund has the potential to be life-changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age.”