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Aviva joins dormant assets scheme as it expands to include pensions

Paloma Kubiak
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Paloma Kubiak

Aviva has joined the dormant assets scheme after transferring forgotten funds for distribution to good causes – the first provider to join after its expansion into pensions and long-term insurance.

The milestone sees Aviva join over 40 banks and building societies already participating in the Government-backed voluntary dormant assets scheme founded in 2011.

Since then, £1.6bn has been transferred from dormant assets, with nearly £900m unlocked to benefit over 2,500 social, community and environmental initiatives across the UK which do not receive local or central Government funding.

However, with the scheme now being expanded to the pensions and insurance sectors, “conservative” estimates suggest a potential extra £880m can be unlocked.

Meanwhile, the scheme reaffirmed that a key principle is “consumer protection”, with Reclaim Fund Limited (RFL) – the regulated operator of the scheme – ensuring that savers, executors and beneficiaries can reclaim their money at any point in the future, including any interest that may have accrued.

Which pension products will be included in the dormant assets scheme?

The Dormant Assets Act 2022 expanded the scope of the scheme to include certain pension and insurance assets:

  • Income drawdowns
  • Money purchase benefits payable under a personal pension scheme
  • Savings endowments
  • Term insurance
  • Whole-of-life assurance
  • Investments bonds
  • Annuities with a guaranteed payment period
  • Deferred annuities.

It doesn’t include any products from mutual insurers, industrial assurance or industrial branch policies, any product that has a ‘with-profits’ element, any insurance policy which is subject to a trust, and any pension that has an automatic-enrolment element.

When is an account considered dormant?

A bank or building society account is considered dormant where there’s no activity or contact for 15 years and where the financial institution’s efforts to trace and reunite the owner with their account or other financial product has been unsuccessful.

The money is transferred to the RFL which distributes the cash to The National Lottery Community Fund. Money is then made available for good causes in England, Scotland, Wales and Northern Ireland via four dormant assets spend organisations: Big Society Capital, Access – the Foundation for Social Investment, Fair4All Finance and Youth Futures Foundation.

However, the rules are different for the expansion into pensions and can be at the point at which it’s identified that a deceased owner had no next of kin.

Or it can be seven years after the death claim is accepted and there is no ongoing contact with those managing the estate; or seven years after the end of the contractual term and where there is no ongoing contact with the owner.

Another rule allows for where the owner’s records indicate they were 120 years old at the time of transfer into the scheme, and there has been no contact with those managing the estate for at least seven years.

But, under the scheme, dormant assets remain the property of their owners and the scheme must match what the business would have paid the owner had the cash proceeds of their assets never been transferred into the scheme. This means that owners can reclaim any money owed to them at any time.

RFL stated: “A key principle of the scheme, and the reason for setting up the scheme in the first place, is to reunite people with forgotten money. In the event that the value of a dormant account or other financial asset is transferred to RFL, the consumer has the right to reclaim the full value of their asset – including any interest that might have accrued – at any point in the future as if it had never been transferred.”

Given the delay to the pensions dashboards roll-out which will allow savers to view all their various pension pots in one place, RFL said its eventual launch “will mean that fewer pensions policies become dormant in future, but in instances when they do, people will continue to have the right to reclaim their assets in their entirety”.

Opening up the dormant assets scheme

Aviva said its involvement “paves the way for other companies in the insurance and pensions sector to join”. While it confirmed funds have been transferred, “RFL and scheme participants do not routinely publish the value of individual transfers to the scheme”.

Kirsty Cooper, group general counsel and company secretary, Aviva plc, said it has worked with RFL and the wider dormant assets community for a number of years to expand the scheme to the insurance and pensions sector and adapt it for longer-term products.

“It is great to see the culmination of a lot of hard work reaching fruition and it is such a privilege to be the first participant in our sector. We have been involved with the dormant assets scheme since 2016 and hope that Aviva’s participation will encourage other companies to take part, with the dual purpose of reuniting customers with their assets while also ensuring dormant assets can have a positive impact on our society,” Cooper said.

Adrian Smith, chief executive of Reclaim Fund Ltd, added: “The dormant assets scheme has a clear purpose and a unique role in uniting public, private and third sectors to deliver a demonstrable, positive impact in our most vulnerable communities.

“We are delighted to open the scheme to financial institutions with dormant insurance and pensions assets enabling them to participate alongside established banks and building societies. The scheme is straightforward to join, tightly regulated and carefully managed so customers can trust in the lifelong promise that they can reclaim any dormant assets at any point in time.”

Beyond pensions and insurance, the scheme will open to assets in the investments and wealth management sector, along with securities or shares in UK plcs in the coming months.

Related: Millions of pounds left in dormant accounts: how to trace your money