Dormant account are accounts which haven’t been touched for many years, despite attempts by financial services businesses to get in touch with the owners.
Once an account is identified as being dormant, the money is moved into a central fund which is put towards good causes through the Big Lottery Fund. So far, more than £600m of funding from dormant accounts has gone to towards benefitting people and communities across the UK.
Today, the dormant account scheme only applies to bank and building society accounts, but an industry report published in April this year looked at expanding the scheme to include pensions, shares and bonds and other investments.
Under these proposals, pensions would be deemed as dormant where the policyholder dies and it’s found there’s no next of kin, or if it’s been seven years after death and there’s been no ongoing contact with those managing the estate.
The Government hasn’t put this approach in to practice for pensions yet, but even if pensions do in future fall under the scope of the dormant accounts scheme, customers will always be able to reclaim their money while they’re alive.
Do you have a forgotten pension?
There’s actually a decent chance you have. Recent figures show there were 18m dormant pensions in 2018, up from 15.8m in 2017. The increase occurred mainly in the private sector, where the number of preserved pensions (pensions left behind when someone changes job) jumped from 11.6m to 13.6m. Learn more about unclaimed pensions in our blog on ’The UK's £20bn lost pensions mountain’.
It can be easy to lose track of pensions, especially if you’ve worked for several different employers over the years and signed up to lots of different schemes.
If you do have several different pensions, consolidating into one plan can make it much easier to keep track of your retirement savings. You can find out more about whether moving your pensions into a single plan is right for you in our blog ‘Should I consolidate my pensions?’
It’s also a good idea to keep careful records of all your pensions.
Tracking down forgotten pension
The Government offers a free Pension Tracing Service for people trying to locate lost pensions. This can help you find contact details for your workplace or personal pension scheme. However, the service won’t tell you the details of your pension such as what the value is, so you’ll need to contact the pension provider to find out.
You’ll also need the name of your employer or the scheme if it’s a workplace pension, or the name of the pension provider if it’s a personal pension.
If you contracted out of SERPS (State Earnings Related Pension Scheme), then there’s also a chance you may have lost a pension. If you think you may have contracted out of SERPS, we’ll help you find these pensions and tell you all about them. Click here to get started.
Once you have tracked down your pensions, our blog ’What happens to your pension when you die’ explains who’ll receive what from your pension when you die, and the tax that must be paid on it.