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Blockchain to Help U.K. Savers Recover Unclaimed Pensions

Distributed ledger tech provider R3 announced to build new blockchain-based identity solutions by providing pension firms with the technology. As a result, this might help savers reclaim some of the $48 billion in lost U.K. pension pots.

Based on the head of the New York firm’s digital identity unit, Abbas Ali, pension providers will be launching their solutions. And it will leverage the R3 tech throughout 2020.

Furthermore, over 33 million people in the U.K. have a pension. However, in a study of advising firm Profile Pension this year, 24 percent of respondents stated that they had likely lost track of one of their pensions.

Still, this is not just a British problem. The Australian Tax Office expects at least AUD 17.5 billion – $11.3 billion – will lay in unclaimed pension pots from 2017 to 2018. Then, back in 2013, the Pension Benefit Guarantee Corporation (PBGC) explained that in the U.S., the unclaimed pensions were over $58 billion.

Thus, in R3’s perspective, the problem boils down to identity.

Ali said, “One of the biggest and most costly exercises in pension funds is identifying the user. And verifying each year that the user is still alive and entitled to these funds and managing the process.”

A lot of pension providers have a tiny option but to verify pension holder’s identities by sending documents to their last known address or even asking holders to show themselves for registration.

For a verification system, it is full of holes. Through commitments, ill-health, or distance, a lot of people might not show up at an office so easily. And some people are simply no-shows. If users do not disclose a forwarding address, the pension provider may have lost its only way of contacting them.

Pension Firms

According to Ali, Blockchain can make a new dynamic.

They have built digital identity platforms with few global partners. Also, they are working with tech partners, “the likes of Gemalto, who are members of government-organized pension funds.”

For the legacy system, people need to identity profiles for every pension scheme they sign up to during the course of their working lives. Moreover, with the use of blockchain, people can create a single identity profile. This is with verifiable information such as passports and driving licenses that they hold and share with their pension providers.

Ali further explained that the blockchain angle substantially provides users with control over their digital identity. And instead of a third party giving a service, a blockchain network might mean citizens are in control of their identity. Also, organizations like government departments would exist on the network, and users can choose to disclose parts of their identity as needed.

Previously, they used R3’s Corda blockchain to make identity management systems. Software firm Persistent released a self-sovereign identity solution on Corda, letting users create and control their identities. Aside from that, Cordentity also offers identity management integrated into enterprise blockchain HyperLedger.

But pension pot administration is one of the use cases where the most economic value lies. And pension startup GROW Super is already using this to support Australians in recovering missing workplace pensions.



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