£800m could be tapped by Dormant Assets Scheme expansion

Up to £800m in pensions and investments assets could be unlocked following a major expansion of the UK’s ‘Dormant Assets Scheme’, the government has confirmed.

The Department for Digital, Culture, Media and Sport indicated that 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.

The major expansion of the Dormant Assets Scheme marks the completion of a four-year review and public consultation process. Responses to the review showed widespread support for expanding the scheme from bank and building society accounts to include assets in these new sectors.

Since 2011, 30 banks and building societies participating in the current scheme have enabled the release of more than £745m from dormant accounts that have been inactive for at least 15 years.

These funds have been used to support a range of social and environmental initiatives across the UK, including helping young people towards employment, tackling financial exclusion, growing the social investment market, and supporting renewable energy solutions.

Commenting on the expansion of the scheme, AJ Bell senior analyst, Tom Selby, highlighted that 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,” Selby said. “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 £745m in funds previously gathering dust with banks and building societies to pay for a variety of projects since its launch in 2011.

“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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