R3 is partnering with UK pension funds and providing them with technology to create new identification solutions on the blockchain to help restore $48 billion in pension savings.
According to Abbas Ali, head of R3’s digital identity division, pension funds will be releasing their own solutions based on R3 technology during 2020. More than 33 million people in the UK receive pensions. But in a study conducted by Profile Pensions this year, 24% of respondents said they could not track some retirement savings.
Assuming that there are more than 1.6 million people in the country who cannot track retirement savings, the average size of which is £23,000, the researchers concluded that the UK alone can store unclaimed pensions worth up to £37 billion (approximately $47.8 billion).
This problem is not unique to the UK. According to estimates
According to the Australian taxation office, in 2017-2018, there were about $11.3 billion in unclaimed pension baskets. In 2013, the pension guarantee Corporation (PBGC) stated
that the amount of unclaimed pension savings in the United States exceeds $58 billion. According to R3, the problem boils down to identification.
“One of the largest and most expensive processes of pension funds is user identification … Every year, it is necessary to verify that the user is still alive and entitled to these funds, and manage the process, ” Ali said.
According to him, many pension providers have no choice but to verify the identity of pension holders by sending documents to their last known address or asking them to come to the office in person. However, due to poor health or other reasons, many people are unable to show up at the office and miss meetings. If they do not inform the pension Fund of their new residential address, the Fund may lose the only way to contact the person.
Ali argues that the blockchain technology might radically change the situation. He notes that R3 has created digital identity platforms with several global partners, including Gemalto, part of the Thales Group – one of the largest identity management companies in the world.
According to R3, thanks to the blockchain, people will be able to create a single identification profile with verifiable information, such as a passport and driver’s license, which they themselves store and transfer to their pension funds. This will also give users more control over their own confidential information.
Although the R3 Corda blockchain has already been used to create identity management systems, Ali notes that managing pension baskets is “definitely one of those uses of blockchain that carries significant economic potential.” The solution is already being used by the start-up GROW Super, which helps Australians return missing retirement savings.
In August last year, the UK Department for work and pensions said it was investigating the possibilities of blockchain.