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Law360, London (January 11, 2021, 12:09 PM GMT) -- The government is to expand its program for gaining access to forgotten or dormant funds at banks to include those held by insurance and pension businesses, as it seeks to raise as much as £800 million ($1.1 billion) to help the country recover from the COVID-19 pandemic.
The state will be able to tap into dormant assets from the pensions, insurance, securities and wealth management sectors and direct them toward social investments and environmental causes, HM Treasury said in a joint statement with the government's Department for Digital, Culture, Media and Sport and the Office for Civil Society, which is responsible for policies on charities.
The expanded dormant assets scheme will prioritize continuing to locate and reunite people with their financial assets. But, where this is not possible, more businesses will be able to voluntarily transfer dormant assets into the scheme, the bodies said on Saturday.
"Funds raised through the existing...scheme have already made a huge difference to vulnerable people and communities across the U.K., especially during the pandemic," Culture Secretary Oliver Dowden said.
People will still be able to reclaim their assets in full at any time, the government said.
Since 2011, 30 banks and building societies involved in the program have enabled the release of more than £745 million from accounts that were not active for at least 15 years, the government said. The funds were used to back social and environmental initiatives, such as youth employment and renewable energy projects.
Tom Selby, senior analyst at investment adviser AJ Bell, said that an estimated 1.6 million retirement pots representing £19.4 billion of assets could be classified as "lost" in the U..K.
"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 added. "Given the strains placed on millions of people by coronavirus, it makes sense to put that cash to good use."
An industry body, the Association of British Insurers, said that despite "robust efforts" there are occasions when customers cannot be traced and money can remain unclaimed for 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," Yvonne Braun, director of long-term savings and protection at the ABI, said.
It will be easier in the future to find lost pensions through the so-called pension dashboard project, which will enable people to view all their retirement savings and track down those they may have been lost track of, the trade association said.
Lawmakers have set out the government's plan to use the online project, which the state hopes will to solve the "small pots" question: an increasing number of people have their retirement savings in different funds linked to the various jobs they have done.
Plans to expand the scheme from banks to include insurers and others were laid out in February last year, just before the United Kingdom announced its coronavirus lockdown in March.
--Additional reporting by Lucia Osborne-Crowley and Najiyya Budaly. Editing by Ed Harris.
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