Govt proposes excluding pensions from dormant asset scheme expansion

The government has proposed excluding pensions from the dormant asset scheme in a consultation on its expansion into new asset classes.

Its consultation queries which asset classes should be added to the scheme, which aims to locate dormant assets and reunite them with their owner or, if that is not possible, investing in social and environmental causes.

These new asset classes include dormant insurance policy proceeds, share proceeds, unit proceeds, and investment asset distributions and proceeds.

Despite recommendations from ‘industry champions’ who recommended the inclusion of certain pensions products that crystallise to cash, including defined contribution personal pensions, income drawdowns, and deferred and guaranteed annuities, the government believes that they should not be included.

It stated: “Since the industry champions began their work, a number of significant changes to the pensions landscape have been expanded, implemented, or announced, including changes to automatic enrolment, pensions freedoms, and the development of pensions dashboards.

“Together, these will change the way that savers interact with their pension savings during their working lives and then use their savings to fund their retirement.

“A current priority of the government in the pensions landscape is maintaining the level of trust individuals have in their pension savings, and it believes that these changes need time to fully develop.”

It noted that the dashboard should make it easier for people to reconnect with lost pensions and auto-enrolment may drive a shift in wider attitudes towards pension saving.

In the list of questions at the end of the consultation, the government asked: “Do you have any objections to excluding pensions from an expanded scheme at this time?”

Commenting on the consultation, Aviva group general counsel and company secretary, Kirsty Cooper, said: “An expanded dormant assets scheme with new asset classes and greater industry participation would be a powerful force for good, both in enhancing the number of customers who are reunited with their assets and in supporting good causes.

“The other industry champions and I urge firms to respond positively to the government consultation. The current scheme has proved very successful and expanding it should provide vital benefits across the UK whilst preserving the rights of consumers.”

Association of British Insurers director of long-term savings and protection, Yvonne Braun, added: “Insurers spend millions of pounds each year trying to reunite people with lost savings. But where customers cannot be traced after robust efforts, it’s right that truly dormant assets can be made available to good causes. These assets still belong to the saver, who can reclaim them in full at any time.

“We look forward to continuing our work with government to reconnect savers with their assets and to support good causes.”

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