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Unclaimed money scheme expanded to aid Covid recovery

Written by: Emma Lunn
Insurance, pension and investment assets will now be included in the scheme which will be used to fund the coronavirus recovery.

The Reclaim Fund was established in 2011 to distribute cash from bank and building society accounts that has been left unclaimed for 15 years or more.

To date, more than £745m has already been distributed from these accounts. The government says expanding the fund to money left in dormant pension and investment funds will help unlock more than £800m.

Expansion of the scheme comes after a four-year review and public consultation process. The money raised will enable continued support of good causes, social investments and environmental initiatives, including recovery from the pandemic.

Led by the financial industry and backed by the government, the expanded scheme will continue to prioritise locating and reuniting people with their financial assets.

Where that is not possible, more types of business will now be allowed to transfer dormant assets into the scheme. People will still be able to reclaim their assets in full at any time.

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.”

Projects backed using money from the scheme include Big Society Capital, Fair4All Finance, Youth Futures Foundation, and Access – The Foundation for Social Investment.

Tom Selby, senior analyst at AJ Bell, said: “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.

“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. This includes £150m which was unlocked to support the charity and voluntary sectors in May last year as part of the UK’s coronavirus response.

“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.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “There’s no need for anyone to worry about their money being given away without their knowledge, because the scheme is designed to avoid scooping up anything other than completely lost assets. Even if you were unlucky enough to have assets brought into the scheme, you have the right to get all your money back at any time.

“If you’ve lost savings, investments, or pensions, there are several ways you can track them down. There are also some handy ways to avoid losing track of your cash in the first place.”

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