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Warnings raised over plans to raid dormant pensions

Parliament-Fog-UK-London-2012-700x450.jpgFormer pensions ministers Ros Altmann and Steve Webb have urged the Government to make sure pension savers are adequately protected under new plans to reclaim “dormant assets” for charities.

Earlier this month the Government announced plans to widen a scheme to release assets in bank and building society accounts untouched for 15 years and put them to good causes, potentially including pension and insurance assets within the scope of reclaimable assets.

While the Government has said “appropriate” efforts would be made to put pensioners back in touch with their money before it was released, and customers could reclaim their money if they discover it thereafter, Altmann and Webb have called for strong consumer safeguards to be put in place.

Altmann tells the Financial Times she “would be very concerned about the Government using dormant pension assets, since many people lose track of pensions for decades but do come back to find them”.

She says: “The main issue is to ensure that, before any assets are used, proper checks and efforts have been made to contact the owner and allow them to come forward.”

Up to £500m could be available to the scheme, according to estimates, bolstering an original scheme that has been in place since 2011.

Webb suggests that the scheme could pushed back until the pension dashboard becomes live so savers have the best chance of finding lost pots before they are reclaimed.

However, he says he has  “no particular issue” with charities benefiting from dormant pension assets “provided that the pension scheme or provider has done everything they reasonably could to reunite people with their lost pensions”.

Labour’s new shadow pensions minister Jack Dromey tells the FT that the Government should conduct a full consultation on the proposals before bringing pensions assets into the scope of the reform.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. We have a client who has just discovered that he has a quarter of a million in a pension plan that he just didn’t understand.

    He’s 63 has worked for 40 odd years and when we ran the cash flow model he now sees that he can retire without having to wait until SPA.

    If he hadn’t by chance shown me an old piece of paper, this would never have come to light. Is it right that his money should be arbitrarily given to say Oxfam?

  2. Having robbed female 63 year olds of at least £8500pa state pension for 3+ years the govt now plans to rob even more pensioners.

    Where will it end?

  3. How about making the ‘dormant’ Lords and EU representatives work for charity, to ‘earn’ their money?

  4. One question would be if the money is taken and subsequently the individual comes back to claim it will there be a payment of the figure it would be if it had remained invested rather than what it was at the time it was made dormant and if so who pays it?

    Many people lose track of pensions for 20 or 30 years and only claim them at retirement. To take them as dormant 10 or 15 years earlier then to pay back the dormant figure only would be criminal.

  5. Whilst I fully appreacte most of these pensions will be attracting the old charging regime!!! I thought a Pension belonged to the “Individual” and not the “State” even the tax relief, which was mostly paid by the same “Individual” This can not possibly be allowed unless the owner of the Retirement fund has achieved the age of one hundred and fifteen. With Pension Freedoms many a client will be leaving funds alone simply to avoid IHT and Estate planning, I thought we had a Right To Privacy and the Data held under the Data Protection Act. The elected Government of this Country can pass laws, which is why I voted to Leave the Common Market, but to even consider raiding a persons assets to fund a grossly over paid charity executive is scurrilous.

    • Indeed Robert, but this is what happens when the country gets taken over by those with one particular political persuasion.

      Were you studying this system in nature, it would be a parasitical organism most akin to a virus. At which point we would all agree it needed to be eradicated…

  6. Paul, one would assume the statutory rate of 8% would have to be applied.

    That was the answer a lady from FOS gave the other week.

    As we know, getting 8% return consistently is pretty hard so would this be a better, patient option?

  7. I really think this idea stinks.

  8. It will never happen, after all the UK didn’t vote for Brexit and Trump never won the US election. Oh, hang on a minute…..

  9. One other question;

    If the money is paid out, and then the pension holder comes forward, who takes the hit.

  10. What you mean the government wants to come up with more ways to generate revenue to support the “client state” they have created.

    Sorry but considering how the “charity sector” has become a cash cow for those of a certain political persuasion, with “managers” and “bosses” being paid vast sums. This just seems like another measure to allow this absurd situation to continue.

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