UK Unclaimed Pension Funds Reach £47.8 Billion, R3 Blockchain Alliance Activates Assets with Identity Verification

R3, a distributed ledger technology developer focusing on the financial sector, stated that it is consulting with a retirement plan management company to create a blockchain-based identity verification solution. This solution will assist users in verifying their identities and claiming their retirement plans.

• Approximately 24% of Britons Unable to Trace Part of Their Retirement Pension
• Digital Identity Trending, but Infrastructure May Still Be Incomplete

There are over 33 million individuals in the UK with retirement pension plans. However, a study by consultancy firm Profile Pensions this year revealed that 24% of respondents stated that they are unable to trace part of their retirement pension.

The study estimates that there are at least 1.6 million unclaimed pension pots in the UK, with an average value of £23,000, totaling approximately £37 billion (around $48 billion USD).

The issue is not exclusive to the UK. According to the Australian Taxation Office, unclaimed retirement funds amounted to $17.5 billion AUD ($11.3 billion USD) in the 2017-2018 period. In 2013, the Pension Benefit Guaranty Corporation (PBGC) in the US reported over $58 billion in unclaimed retirement funds.

Identity Verification as the Main Issue

New York Digital Identity Department Head Abbas Ali stated that these pension management companies will be adopting solutions provided by R3 this year. Ali noted:

One of the biggest and most expensive costs in pension funds is verifying users, including annual verification of whether the user is still alive, entitled to the pension, and managing these claiming processes.

The current identity verification system is full of loopholes. Due to issues like illness, document handling, or distance, many users are unable to personally process the relevant procedures on time; if users fail to update their address promptly, pension plan companies may lose the only way to contact them.

Summarizing and Verifying User Identity

Ali believes that blockchain technology will create a new landscape:

We have established a digital identity platform with global partners, including Gemalto (one of the largest identity management companies globally). In past systems, users had to sign identity data for different retirement plans at various stages of their careers. Through blockchain, users can create a single identity profile that includes verifiable information held by the user and shared with pension management companies.

Reports indicate that R3's Corda blockchain has been used to build identity management systems, and software company Persistent has also launched an identity verification solution on Corda, allowing users to create and manage their identities.

Is Blockchain Necessary?

While many experts acknowledge the necessity of standardized digital identities, questions have been raised about the adoption of blockchain technology. Director of digital payments consultancy firm Consult Hyperion, David Birch, stated:

The value brought by blockchain is not as significant as imagined; a centralized database would still serve the same purpose in allowing users to share digital identities, and I don't think this differs from verifiable identities stored in a distributed ledger.

David Birch concluded that the only distinction is that blockchain users have the right to maintain their identity, but many might prefer a regulated third-party institution to handle their personal data. Furthermore, many blockchain-based identity management systems have yet to address how to handle the issue of lost private keys, posing another risk.

Further Reading

• South Korea's Blue House Petition System to Be More Transparent, Launching Blockchain System in March
• Commemorating "Black History Month" in the US, Discussing Whether Cryptocurrencies Solve Financial System Inequality

Join Telegram now for the most accurate information on financial technology, blockchain insights, and industry examples!