Child Trust Fund Fees: How Hidden Charges Reduced Savings from £250 to £12
When Max Prince turned 18, he was shocked to discover that his Child Trust Fund was worth only £12.39, a far cry from the £250 government starter fund he’d expected to grow. Max’s story highlights the impact of Child Trust Fund fees, raising concerns about the transparency of charges on these accounts meant to benefit young adults.
Hidden Child Trust Fund Fees and Their Impact
In 2006, Max’s parents opened a Child Trust Fund with an initial government deposit of £250. The fund, intended to grow tax-free until maturity, was worth £300 by 2012. However, a £30 annual fee, introduced in 2013, steadily drained the account. Investment firm Columbia Threadneedle, which managed Max’s fund at maturity, stated it tried to notify Max’s family about the fees, but the letters went unopened as the family had moved.
Issues with Transparency in Child Trust Fund Fees
While fees on Child Trust Funds are capped at 1.5%, Max’s account effectively saw deductions surpassing 10% annually. His parents were unaware of the added costs, and many families are left in similar situations, either due to lack of communication or complex fee structures that weren’t clear from the start. Max’s parents plan to challenge Columbia Threadneedle, expressing their frustration with the unexplained erosion of the fund’s value.
The Bigger Picture: Unclaimed and Lost Child Trust Funds
Investment expert Gavin Oldham, who leads efforts to reconnect families with lost Child Trust Funds, estimates that around £800 million remains unclaimed. He encourages families facing issues with Child Trust Fund fees to seek compensation, especially as these accounts were designed to give young adults a financial head start.
For Max, and potentially many others, the unexpected fees have cast doubt on the transparency and purpose of Child Trust Funds, raising broader questions about financial security for young adults.
External link: BBC
Internal link: Kenkou Land
