Government child trust fund

Sarahhinard1

My daughter has just turned 18 and we looked into her child trust fund. Iv never put anything in it nor have I looked into it. When she originally received the £250 the government put into Barclays. So when she accessed her account she has only got £339.00, which can’t be right as my niece who was born 18 month after my daughter has £1336.00 in hers and her mum has never added any funds to her trust fund neither. Hers is with Scottish friendly, should I look into this further and if so can anyone tell me how to go about this. 

refluxer

If no extra money has been paid into either, then I would guess that one is a Cash CTF and the other a Stocks and Shares CTF.

£339 sounds about right for a Cash CTF with an original £250 government contribution, that's never been added to or moved from one provider to another to get a better rate. The rates were originally pretty good but have dwindled over time, especially once Junior ISAs were introduced as their effective replacement.

Scottish Friendly don't currently offer a Junior Cash ISA so the same could have been true of their CTFs but if your niece's CTF isn't actually a Stocks and Shares CTF, then another explanation could be that she received a higher initial contribution from the government (and additional contribution at age 7) due to being from a household with a lower income. 

MX5huggy

I guess you chose the Barclays account and deposited the voucher, being a cash account only paying interest.

Where as your niece (or parents) did nothing at all so the government invested the money randomly with one of the stocks and shares CTF’s available at the time, 

You have discovered that holding cash in poorly paying savings products for years and years is not an effective way to get rich. Even expensive stocks and shares investments outperform cash over the long term. 

Sarahhinard1

Thank you for your replies, someone else mentioned the extra payment at 7 yrs, iv also been on a low income( single parent) for all my daughters life. Do you think I could look into that extra payment she didn’t receive or should I just let it go. Thanks 

refluxer

Sarahhinard1 said:

Thank you for your replies, someone else mentioned the extra payment at 7 yrs, iv also been on a low income( single parent) for all my daughters life. Do you think I could look into that extra payment she didn’t receive or should I just let it go. Thanks 

The Cash vs Stocks and Shares explanation is a more likely reason for the difference in current value, IMO. I wouldn't waste time and energy trying to pursue any possible missed payment after such a long time as you're unlikely to get anywhere. The government abandoned CTFs back in 2011 and replaced them with Junior ISAs.

Reaper

Sarahhinard1 said:

Thank you for your replies, someone else mentioned the extra payment at 7 yrs, iv also been on a low income( single parent) for all my daughters life. Do you think I could look into that extra payment she didn’t receive or should I just let it go. Thanks 

There was an extremely short window of opportunity for children to get the second payment because it was abolished soon after it started paying out.

Only children who turned seven between 1 September 2009 and 31 July 2010 got it. So unless that applies to your daughter she doesn't qualify.

MSE_Laura_F

Hi @Sarahhinard1,

Loads of helpful answers here. I thought I'd also check what my colleagues in the office had to say about this. They said:

"The answer on this is two-fold:

• Different amounts were paid by the Government depending on when the child was born and based on the family’s income (those on lower incomes got cash vouchers up to £500 as opposed to the standard £250). This is all mentioned in our Child Trust Funds guide.
• Different accounts will have different interest rates. It sounds like the Barclays account is cash whereas the Scottish Friendly account is probably stocks and shares – which has clearly outperformed Barclays’ in the long run regardless of top-ups."
  
  

Hope this helps,

MSE Laura F

Sarahhinard1

Thank you for the advice, I was unemployed when my daughter was around 6-9 yrs old so she should have received a second payment but didn’t, is it worth me looking into this further or am I wasting my time. 

I feel she has already missed out massively with the rubbish interest she has gained on the account. Everyone I spoke to who’s kids are at the same age have all told me there
kids accounts are in the thousands. 

If you think I should look into this can you advise me as to whom I should contact 
thanks
sarah

eskbanker

Sarahhinard1 said:

I was unemployed when my daughter was around 6-9 yrs old so she should have received a second payment but didn’t, is it worth me looking into this further or am I wasting my time.

Did she meet the criteria shown in the earlier post?

Reaper said:
There was an extremely short window of opportunity for children to get the second payment because it was abolished soon after it started paying out.

Only children who turned seven between 1 September 2009 and 31 July 2010 got it. So unless that applies to your daughter she doesn't qualify.

Sarahhinard1 said:

I feel she has already missed out massively with the rubbish interest she has gained on the account. Everyone I spoke to who’s kids are at the same age have all told me there
kids accounts are in the thousands. 

If you think I should look into this can you advise me as to whom I should contact

The decision about whether to use a cash savings version of the product or an investment one would presumably have been yours at the time - with hindsight those who invested earned more, but that wasn't guaranteed in advance....

refluxer

Sarahhinard1 said:

I feel she has already missed out massively with the rubbish interest she has gained on the account. Everyone I spoke to who’s kids are at the same age have all told me there kids accounts are in the thousands. 

The idea behind the CTF was that it was a way to save for your child's future - the initial payment from the government was just supposed to be an incentive to get started, but it's understandable that not everyone could afford to continue contributing. Those who did, though, are likely to see balances in the thousands over 18 years even with modest contributions, whether that was Stocks and Shares or Cash. Additional contributions might another reason why your friends have bigger balances ?

Initial Cash CTF interest rates were actually really high but have dwindled over the years. It's easy with hindsight I know, but it's always good to keep an eye on the rates of your savings accounts and be prepared to switch if necessary, as Barclays would have contacted you with each rate drop. I converted both of my kids' Cash CTFs to Junior Cash ISAs a while ago in order to benefit from the better rates available for those newer products. If I had my time again, I would probably opt for the Stocks and Shares option.... another example of the benefit of hindsight !

strawb_shortcake

refluxer said:

Sarahhinard1 said:

I feel she has already missed out massively with the rubbish interest she has gained on the account. Everyone I spoke to who’s kids are at the same age have all told me there kids accounts are in the thousands. 

The idea behind the CTF was that it was a way to save for your child's future - the initial payment from the government was just supposed to be an incentive to get started, but it's understandable that not everyone could afford to continue contributing. Those who did, though, are likely to see balances in the thousands over 18 years even with modest contributions, whether that was Stocks and Shares or Cash.

Initial Cash CTF interest rates were actually really high but have dwindled over the years. It's easy with hindsight I know, but you should have kept an eye on the rates and shopped around as they would have contacted you with each rate drop. I converted both of my kids' Cash CTFs to Junior Cash ISAs a while ago in order to benefit from the better rates available for those newer products. If I had my time again, I would probably opt for the Stocks and Shares option.... another example of the benefit of hindsight !

Same, if only I knew then what I knew now. We did secure initial interest rates of around 7% so it performed well initially but we dropped the ball on keeping watch so we could have done a lot better