UK targets dormant wealth and pensions to aid virus recovery
18 January 2021: The UK government is to expand its ability to free up forgotten or dormant funds to help the country recover from the coronavirus pandemic.
Revisions to the Dormant Assets Scheme will soon allow the state to tap into more than £800m of inactive investments from the pensions, securities, insurance and wealth management sectors.
The broadened remit covers assets held in investment vehicles, including savings endowments, bonds and income drawdown, according to the Department for Digital, Culture, Media and Sport.
The expansion comes on top of more than £745m already distributed from banks and building societies into communities over the last decade that have been removed from accounts dormant for at least 15 years.
Stockbroker AJ Bell estimates 1.6m pension pots worth £19.4bn of assets could be classified as “lost” in the UK. Ministers said the priority would be to locate and reconcile people with their financial assets, but where this is not possible, businesses will be able to transfer wealth into the scheme.
Under the existing rules, individuals have recourse to the Financial Ombudsman Service (FOS) to resolve disputes about reclaims of securities from bank and building society accounts.
Where assets proposed for inclusion in the new scheme do not fall naturally within the scope of the FOS, the government is encouraging industry and Reclaim Fund Limited to work with the Ombudsman to reach an agreement on voluntary arbitration.
“Whilst it’s important the financial services industry does all they can to reunite owners with their assets, expanding the scheme will allow more support for a variety of community projects when need is greater than ever following the coronavirus pandemic,” said Philippa Kelly, director in the ICAEW Technical Strategy Business Group.
Individuals will still be able to reclaim their assets in full at any time, and experts say ICAEW members can play a critical role, raising awareness clients’ assets and helping them reclaim any dormant funds.
“I am pleased that consumer protection is still a priority for the scheme,” added Alison Ring, ICAEW Public Sector director. “I welcome the government response following the example from other countries in widening the scheme to increase the potential funds available to support well-deserved causes.”
Last year, £150m was unlocked in May to support the UK’s charity and voluntary sectors in their roles helping to support the UK through the coronavirus crisis.
The full list of assets within the scheme has its own page on the government’s website.