The UK Government has announced an expansion of its Dormant Assets Scheme, which will unlock more than £800 million to support the UK’s recovery from Covid-19.
Dormant assets across the insurance and pensions, investment, wealth management and securities sectors are set to be unlocked, following a four-year review and public consultation.
While the scheme’s priority is to continue locating and reuniting people with their financial assets, where this is not possible, more businesses will now be allowed to participate voluntarily in transferring dormant assets into the scheme. However, people will still be able to reclaim their assets in full at any time.
The Government said funding raised through the expansion of the scheme will enable “continued support of good causes, social investments and environmental initiatives.”
Tom Selby, senior analyst, AJ Bell, said: “An estimated 1.6 million retirement pots representing £19.4 billion 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.”
The Dormant Assets Scheme has successfully marshalled £745 million in funds across 30 banks and building societies to pay for a variety of projects since its launch in 2011. This includes £150 million used to support the charity and voluntary sectors in May 20220 as part of the UK’s Covid-19 response.
Oliver Dowden, secretary of state for digital, culture, media and sport, 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.”
Selby added: “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 £800 million. 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.”
