Pensions and investments left untouched for years will be handed to good causes under plans to expand the dormant assets scheme, the Government has an
Pensions and investments left untouched for years will be handed to good causes under plans to expand the dormant assets scheme, the Government has announced.
An estimated £800million could be raised by broadening the scope of the existing project, which has raised £745million from inactive bank and building society accounts since 2011.
A rule that money must always be returned in full should the original holder ever come forward will apply, and firms will still have to try to contact old customers and reunite them with their cash.
Dormant funds: Orphan pensions and investments worth £800m could be handed to charity
The Dormant Assets Scheme for banks and building societies has distributed money raised so far to social and environmental initiatives – and in May this year it released £150million to support UK charities during the pandemic.
Funds drummed up from dormant pension and and investment products will be used for similar causes, including long-term recovery efforts following the Covid-19 crisis.
However, the move will require legislation and it is unclear when money will start being released.
At present, money held in savings and bank accounts is passed to a special Reclaim Fund if it remains untouched for 15 years, but the time periods to qualify as ‘dormant’ are likely to vary across different pension and investment assets.
How do you track down old financial products?
Savers often lose track of old accounts, pensions and investments over the course of a lifetime, and unfortunately a lot of this money is never claimed.
Read more here about how to find your lost assets.
Those set to be covered include:
– Proceeds of life insurance and retirement income policies
– Shares or units in collective investments
– Investment asset distributions and proceeds
– Shares and distributions from shares
– Proceeds from corporate actions.
Money raised to date has been spent on projects including the following causes.
– Big Society Capital, an independent financial institution launched in 2012, was handed £425million and has invested in 1,200 social enterprises and charities.
– Fair4All Finance, set up in 2019, has been given £96 million to support the financial wellbeing of vulnerable people, and increase access to fair and affordable financial products and services.
– The Youth Futures Foundation was given £90million to help unemployed, disadvantaged young people across the country to find jobs.
Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport, says: ‘Funds raised through the existing Dormant Assets Scheme have already made a huge difference to vulnerable people and communities across the UK, especially during the pandemic.
‘Expanding the scheme will mean hundreds of millions more for good causes, helping us to build back stronger in the years to come.’
Yvonne Braun, director of long-term savings and protection at the Association of British Insurers, welcomed the move to free up dormant assets in the insurance and pensions sector.
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‘Insurers spend millions of pounds every year trying to reunite people with lost savings,’ she says. ‘Despite robust efforts there are occasions where customers cannot be traced, and money remains unclaimed for many years, even decades.
‘It is right that these truly dormant funds can be made available to good causes so they can make a real difference to people’s lives.
‘Crucially, the proposals also ensure that no matter how long a fund has been dormant, the owner can claim their money back at any point in the future.’
Tom Selby, senior analyst at AJ Bell, says: ‘It is important to make clear that this is not a pensions raid of any sort.
‘Those who hold a policy which is used as part of the Dormant Assets Scheme will always be able to claim their funds back, no matter how long it has been deemed dormant.’