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Dormant Asset Scheme to include insurance and pensions

The Government has announced that the Dormant Asset Scheme will be expanded to some insurance and pensions products. The Dormant Asset Scheme is an independently run scheme that firms can voluntarily sign up to, funds in the scheme are then donated to civic and charitable causes. The announcement means money untouched for a long period of time in certain insurance and pension products will be made available for charitable causes, in limited circumstances and only where the customer cannot be traced. However, even after any money is transferred into the Dormant Assets Scheme, the customer can access the policy and reclaim it from the provider in full in the future.

Yvonne Braun, Director of Long-term Savings and Protection at the ABI, said:

“We welcome the Government expanding the Dormant Asset Scheme to insurance and pensions. Insurers spend millions of pounds every year trying to reunite people with lost savings. Despite robust efforts there are occasions where customers cannot be traced, and money remains unclaimed for many years, even decades. It is right that these truly dormant funds can be made available to good causes so they can make a real difference to people’s lives. Crucially, the proposals also ensure that no matter how long a fund has been dormant, the owner can claim their money back at any point in the future.

“With an estimated £2.1 billion dormant assets in the insurance and pensions sector, the message to customers is: It’s your money, come and claim it. Pensions Dashboards will help enable more people to track down pensions they may not know they had. Until then, it is vital that the Government continues to support industry efforts to reunite people with their lost savings.”

How can customers track down lost insurance policies or pensions?

The ABI has guidelines to trace and claim insurance and pension policies for customers. If you think you are a customer of an insurance provider who does not have your address, you can find contact details of providers through the Register of Consolidation.

How does the insurance and long-term savings industry try to reunite customers with their lost money?

The ABI has created guidance and a framework on best practice for the industry, informed by research into customer behaviour. This includes:

How will be finding lost pensions become easier in the future?

Pensions Dashboards will enable people to see all their pension pots in one place and allow them to track down pots they may not have known existed. This will help increase the number of people reunited with dormant assets.

How will the Dormant Asset Scheme Work?

Cash will only be put into the scheme if it meets one of the following two sets of criteria:

  • Whichever comes first, the point at which it is identified that a deceased owner has no next of kin; or seven years after a death claim is accepted and there is no ongoing contact with these managing the estate; or seven years after the end of the contractual term and there is no ongoing contact with the owner.
  • Or the owner’s records indicate they were born before the oldest living person known at the time of transfer into the Scheme; and there has been no contact with those managing the estate for at least seven years.

What insurance and pension products will be included in the scheme?  

  • Savings endowments
  • Term insurance
  • Annuities with a guaranteed payment period
  • Whole-of-life assurance
  • Investment bonds
  • Income drawdown
  • Deferred annuities

The arrangement for Defined Contribution pensions is still under consideration. If any are included, only pensions with a contractual end date where the assets are held in cash and the customer or beneficiary cannot be traced would be in scope.

What insurance and pension products are excluded from the scheme?

  • with-profit funds;
  • industrial branch policies;
  • policies and assets held under group trusts, including occupational pensions;
  • general insurance assets;
  • personal trusts; and
  • assets held by mutual insurers and friendly societies.

How are the funds from the Dormant Asset Scheme spent?

The funds are used to support charitable and civic causes. For example, in response to Covid-19, the release of £150m of dormant assets funding was announced in May 2020 to expand an affordable credit scheme to help people struggling with debt and support the charity and voluntary sector across the UK.

In England, funding has been spent on supporting young people and promoting financial inclusion. Beneficiaries include the Youth Futures Foundation, Fair4All Finance, Big Society Capital and Access – the Foundation for Social Investment.

Work in the devolved administrations has a similar focus. For example, the Engage to Change project in Wales uses dormant assets funding to break down barriers and stigma around disability by supporting young people with learning difficulties and/or autism into employment. Since 2016, intensive support has enabled 959 young people to develop new skills; 381 young people to secure a paid placement; and 272 young people to move into secure employment after their work placement. Research has also found a number of mental health benefits associated with the project.


Savings Endowment

A fixed-term combined investment and life insurance policy usually used in conjunction with a mortgage. The policy is designed to pay out either a lump sum at the end of the policy term, known as maturity, or a sum assured on the death of the insured person if that takes place during the policy term.

Term insurance

A fixed-term life insurance which pays out a sum assured following the death of the insured person during the policy term.

Whole-of-life assurance

A life insurance that is designed to continue for the remainder of the life of the insured person. The policy pays out a sum assured following the death of the insured person, regardless of when the death occurs.

Investment bond

An investment bond is a form of life insurance contract that does not have a fixed term and which allows policyholders to invest in a range of investment funds. Investments are typically made via an initial lump sum, and policyholders are generally free to make further investments into their policy at any time.

Annuity (both deferred and guaranteed)

An annuity is a lump sum investment, which typically guarantees to pay a certain level of income for the remainder of the policyholder’s life. Unless the annuity was purchased with income guarantees (see below), annuity payments cease on the death of the policyholder.

Income drawdown

An income drawdown contract is a type of defined contribution personal pension policy which allows the policyholder to take regular income withdrawals. The fund remains invested, so any income withdrawals reduce the amount of the pension pot that is available for future investment.

Defined contribution (DC) personal pension

A defined contribution personal pension is a retirement savings vehicle that allows monthly or lump sum contributions, subject to various contribution limits. Tax relief is provided on contributions at source, and it is designed to allow policyholders to accumulate funds to enable them to provide an income for themselves in retirement. The pension will typically pay out a lump sum on the death of the policyholder prior to them either taking an annuity or an income drawdown policy.

For more information contact the Press Office

Last updated 09/01/2021