Aviva is the first company from the Insurance and Pensions sector to join the expanded Dormant Assets Scheme.
In June 2023 it was announced that Aviva was the first company from the Insurance and Pensions sector to make a transfer into the Dormant Assets Scheme. The Scheme takes ‘forgotten assets’ and puts them to good use while guaranteeing that the rightful owner can still claim what is theirs.
Dormant assets make an active difference
Back in the days when we all carried cash, finding money ‘down the back of the sofa’ was a common occurrence.
But what if it wasn’t found immediately after it was dropped down there? What happened to that forgotten money?
Usually it would sit there, amongst the sweet wrappers and springs until either a) someone stuck their hand down there and fished it out, or b) you got rid of the sofa, unaware of the treasure buried inside.
But what happens to forgotten assets that sit untouched in bank accounts, pensions and insurance policies?
Well, up until recently, very little. The banks and insurers would hold on to the assets in case someone either claimed it, or the rightful owner was tracked down.
A scheme to activate those assets
All is not lost
Under the Scheme, dormant assets remain the property of their owners and they can reclaim any money owed to them at any time.
But in 2011 that changed when the Dormant Assets Scheme was set up.
This means that assets sitting in a variety of accounts and policies could now be put to good use.
(There are strict criteria around what is classed as a dormant asset, and the rightful owner of the funds is free to claim it at any time. See more at the end of this article).
When it was first launched, the Scheme allowed banks and building societies to move dormant bank accounts into the Reclaim Fund. Since 2011, these funds have been distributed by the National Lottery Community Fund across the UK.
In fact, so far almost £900m pounds has been given to over 2,500 social, community, financial inclusion and environmental initiatives.
An invitation to insurers
For around 10 years, the Scheme was only open to banks and building societies. But millions of dormant assets remain tied up in a number of other financial products.
"We have been involved with the Dormant Assets Scheme since 2016 and hope that Aviva’s participation will encourage other companies to take part."
That’s why in 2022 the Dormant Assets Act expanded the range of financial providers who could take part, bringing into scope the Insurance and Pensions sector. It was the culmination of six years of work by the Dormant Assets Industry Champions , who worked to bring their respective sectors into the Scheme, with Kirsty Cooper, Group General Counsel and Company Secretary at Aviva, representing the Insurance and Pensions sector.
In May 2023, Aviva became the first company from the insurance and pensions industry to complete a transfer into the Dormant Assets Scheme.
“We have been working proactively with Reclaim Fund and the wider dormant assets community for a number of years to expand the hugely successful Dormant Assets Scheme to the Insurance and Pensions sector and adapt it for longer-term products,” said Kirsty Cooper.
“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.”
Strength in numbers
"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."
This milestone sees Aviva join over 40 UK banks and building societies who participate in the Scheme. It’s hoped other pension and insurance firms will now follow and the Association of British Insurers has developed new resources to help companies in their preparations for joining.
In the next few months, the Scheme is also due to open to assets from the investments and wealth management sector as well as securities or shares in UK plc’s.
Adrian Smith, OBE, Chief Executive of Reclaim Fund Ltd, said: “The Dormant Assets Scheme has a clear purpose and a unique role in uniting public, private and third sectors 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.”
For more information on the Dormant Assets Scheme visit the government website.
Watch Kirsty Cooper, Aviva Group General Counsel and Company Secretary and Tony Carnell, Customer Reconnection Manager, explain how the Dormant Assets Scheme works in practice and puts dormant assets to good use.
Transcript
Kirsty Cooper:
My name is Kirsty Cooper, and I'm General Counsel and Company Secretary of Aviva. And I'm also the champion for the Insurance and Pensions sector in relation to the expansion of the Dormant Assets Scheme. So, the Dormant Asset Scheme is the use of unclaimed assets in different sectors, including my sector Insurance and Pensions, that remain dormant for a long time and have been unclaimed by their owners.
But the good thing is, if the owner ever appears, they have the right to reclaim that asset in perpetuity, so they won't lose out. And, we're going to use those assets by moving them to the Dormant Asset Scheme so that they can be used for charitable purposes, community purposes, youth purposes and financial inclusion. So, participating in the Scheme and being first to join the expanded Scheme absolutely aligns with Aviva’s social purpose and values.
With you today, for a better tomorrow and, that's absolutely what these assets are going to do.
Tony Carnell:
Hi, I’m Tony Carnell and Customer Reconnection Technical Support Manager at Aviva. So, it's a partnership between Aviva and Reclaim Fund Ltd. Reclaim Fund held our hand through the processes. The process of onboarding and payment and reclaim. And, that handholding made it really, really easy in respect of what do we need to do, what do we need to develop and the controls we need to put in place.
If you're going to participate, I would suggest you make early contact with Reclaim Fund. We've been in contact with Reclaim Fund for some while and it has definitely helped us to understand a very simple process, build a very strong relationship, one that is based on trust and one that is based on openness as well.
Kirsty Cooper:
I became a champion because I felt very strongly that firms like Aviva have a wider social responsibility, and in using these assets, we can actually fulfil that responsibility.
We really tried to maintain that sort of momentum in the expansion of the Scheme over the last seven years, and we now have a piece of legislation and we know the Scheme will be up and running in 2023, and I think that's a huge achievement for everybody involved. It's a nice solution really. You know, you've got a problem in dormant assets and this is how to how to use them for good.
1. What is a dormant asset?
A dormant asset is a financial product, such as a bank account, life insurance policy or money purchase pension that the owner, executor or beneficiary has not accessed for an extended period (15 years in the case of bank accounts) and where the financial institution’s efforts to trace and reunite the owner with their account or other financial product has been unsuccessful.
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 their assets never been transferred into the Scheme. This means that owners can reclaim any money owed to them at any time.
2. Which pensions and insurance assets are now eligible for the scheme?
The Dormant Assets Act 2022 expanded the scope of the Dormant Assets Scheme to include certain pension and insurance assets, namely:
- 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
Participants have a shared commitment to reunifying assets with their owners, who are entitled to the converted cash value plus interest (subject to the asset’s terms and conditions).
Where this is not possible, the monies from dormant assets are put to good use to the benefit of society and communities across the UK.
Companies also benefit by transferring the liability for dormant assets to Reclaim Fund Ltd while also streamlining their internal processes.
3. How is dormancy defined for pensions and insurance products?
Pensions and insurance products are considered dormant at the earliest of these points:
- The point at which it is identified that a deceased owner had no next of kin; or
- 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; or
- 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.
