Blockchain Can Help UK Savers Recover $48B in Unclaimed Pensions, Says R3

Distributed ledger tech provider R3 says it's providing pension firms with the technology to build new blockchain-based identity solutions that could help savers reclaim some of the $48 billion in lost U.K. pension pots.

According to Abbas Ali, the head of the New York firm's digital identity unit, pension providers will be releasing their own solutions that leverage the R3 tech throughout 2020.More than 33 million people in the U.K. have a pension.

In a study by advice firm Profile Pensions this year, 24 percent of respondents said they had likely lost track of one of their pensions.

Estimating that there are more than 1.6 million lost pension pots nationwide, each with an average value of £23,000, the study concluded there could be as much as £37 billion worth of unclaimed pensions in the U.K. alone.

The Australian Tax Office estimated that $17.5 billion AUD lay in unclaimed pension pots in 2017-2018.

In 2013, the Pension Benefit Guaranty Corporation said there was more than $58 billion in unclaimed pensions in the U.S.In R3's view, the problem boils down to identity.

By using blockchain, people could create a single identity profile, with verifiable information like passports and driving licenses, that they themselves hold and share with their pension providers, according to R3."The blockchain angle essentially gives users control over their digital identity ... instead of a third party providing a service, a blockchain network could potentially mean citizens are in control of their identity and organizations including government departments would exist on the network and users would be able to selectively disclose parts of their identity as needed," Ali said.

It is already being used by pensions startup GROW Super, which helps Australians recover missing workplace pensions.

While many experts recognize the usefulness of a standardized digital identity profile, some have expressed skepticism over why it should use blockchain.

The only difference is blockchain makes users responsible for maintaining their own identities, Birch said.