Govt expands Dormant Assets Scheme to include pensions

The government’s Dormant Assets Scheme is to be expanded to include pensions and investments, unlocking up to £800m for use in charitable causes.

Assets held via vehicles including savings endowments, investment bonds and income drawdown will be made available for a range of UK projects through the scheme, with over £745m having already been distributed to a variety of causes using dormant assets held in banks and building societies.

The government’s announcement said funding raised through the scheme would “enable continued support of good causes, social investments and environmental initiatives”.

The scheme will always allow policyholders to claim their money back, no matter how long the fund has been deemed dormant.

The expansion of the scheme follows a four-year review, which the government said showed “widespread support for expanding the scheme from bank and building society accounts to include assets in these new sectors”.

Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden, said: “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.”

The announcement added that the priority of the scheme would continue to be locating and reuniting people with their financial assets.

Economic Secretary to the Treasury, John Glen, stated: “Banks and building societies across the UK are working tirelessly to reunite people with forgotten assets. But on occasions where this isn’t possible, it’s right that these funds are used to tackle some of the UK’s most pressing social and environmental challenges.

“The expansion of the scheme will mean more people are reconnected with their assets, whilst also making more money available for good causes.

AJ Bell senior analyst, Tom Selby, commented: “An estimated 1.6 million retirement pots representing £19.4bn of assets could be classified as ‘lost’ in the UK. While the industry’s priority must remain reuniting these pots with their owners, there are various circumstances where this simply won’t be possible and the assets become dormant.

“Where this is the case – and particularly given the strains placed on millions of people by coronavirus – it makes sense to put that cash to good use.”

Selby added that the £745m that had been “successfully marshalled” to pay for a variety of projects since the scheme’s launch in 2011 included “£150m which was unlocked to support the charity an voluntary sectors in May last year as part of the UK’s coronavirus response”.

He concluded: “By using dormant pensions and investments in a similar way, the Dormant Assets Scheme’s financial war chest could be boosted to the tune of £800m. This is money that could make a meaningful difference to the lives of thousands of people struggling through the pandemic.

“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.”

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