Millions in SA are owed R42bn in unclaimed pensions. How to confirm if you're one of them
- Almost 4.8 million South Africans have not yet claimed their pension savings, worth in total almost R43 billion.
- The Financial Sector Conduct Authority wants South Africans to access its online database of unclaimed pensions, or contact it directly, to find out whether they are owed money.
- It really doesn't want you to use tracing agents who are not linked to pension funds.
- For more articles, go to www.BusinessInsider.co.za.
Almost R43 billion in unclaimed pension benefits are held in the name of 4.77 million untraced beneficiaries in South Africa, according to the latest available data from the Financial Sector Conduct Authority (FSCA).
This is causing major headaches for the authority – not in the least because unscrupulous so-called independent tracing agents are costing South Africans thousands. They advertise their services to assist South Africans in in accessing these unclaimed pension benefits in exchange for a fee.
The FSCA strongly advises against using these services.
“South Africans shouldn’t use tracing agents that are not affiliated to a specific fund, particularly if they don’t have any knowledge of ever having saved with the particular fund the agent claims to represent,” says Olano Makhubela, divisional executive of retirement funds at the FSCA. “Rather use the FSCA database, which you can search for free by simply visiting our website. Alternatively, you can contact our call centre telephonically, by SMS, or even physically for assistance.”
“There are scams going on where people get approached by someone claiming to be an agent who can help them access money allegedly owed to them in the form of an unpaid benefit,” says Makhubela. “However, upon investigation we often find that they never belonged to the fund in the first place yet ended up paying the agent R1,000 to help them access unclaimed funds. People shouldn’t be gullible and must make sure that they belonged to the fund in the first place or use the free FSCA database to see if there is money owed to them.”
The Pension Funds Act defines an unclaimed benefit is any benefit not paid by a fund to a beneficiary within 24 months of the date it becomes legally payable, typically defined as when the member left the employment. The FSCA, which monitors funds regulated and supervised under the Pension Funds Act, says more than R22.93bn in previously unclaimed benefits was paid out to 647,528 beneficiaries between 2014 and 2018.
But by 2018, there was still more than R42.83bn in unclaimed pension benefits – and that number will probably increase once 2019 data is added by pension funds, a process that has been delayed due to the impact of Covid-19. The Government Employee Pension Fund (GEPF), which is not overseen by the FSCA, also has an additional R1.73bn in unclaimed pension benefits, according to its 2019 annual report.
Makhubela says that anyone who believes they have an unclaimed benefit owing to them should first ascertain whether or not they were indeed a member of a fund. This can be determined by checking to see if any salary deductions were made for fund contributions as well as any records of possible employer contributions.
At present all private retirement funds in South Africa are required to disclose the amounts they hold in unclaimed benefits to the FSCA as well as the details of the beneficiaries. These details are then captured in the FSCA’s unclaimed benefits database which can be accessed here: https://www.fsca.co.za/Customers/Pages/Unclaimed-Benefits.aspx
“The biggest problem is the lack of accurate historical or personal information,” says Makhubela. “We also have a lot of situations where the current administrators took over from previous funds that no longer exist and are sitting with incomplete information.”
Makhubela says the problem is exacerbated by the fact that prior to 1994 many South Africans simply did not have identity numbers or fixed places of abode with traceable addresses.
The issue has prompted non-profit organisation Open Secrets and a group of claimants to establish the Unclaimed Benefits Committee to lobby parliament about alleged tardiness by fund administrators in tracing beneficiaries of unclaimed benefits. This is particularly galling given that pension funds continue to charge fees on these unclaimed funds.
“The FSCA has quarterly meetings with the largest funds which include the industry funds holding the largest unclaimed assets to monitor progress relating to unclaimed benefits,” says Makhubela. “On-site inspections are being conducted with unclaimed benefit funds to determine progress in tracing and paying unclaimed benefits to persons entitled thereto. The FSCA doesn’t regulate annual fees charges by administrators.”
The National Treasury announced in the 2020 Budget that legislation will be prepared to consolidate unclaimed benefits in the retirement industry and establish a single registry. Makhubela says the new Conduct of Financial Institutions Bill (COFI), which was published by the Minister of Finance in December 2018 and open for public comment until 1 April 2019, seeks to establish a single, centralised fund for all unclaimed pension funds. While this centralised fund will initially only require regulated pension funds that fall under the jurisdiction of the FSCA to pay over all unclaimed funds, it may in time be expanded to include unclaimed funds from the GEPF as well as insurance companies.
“This should manage any perceived or actual conflicts of interest in the industry and provide for controlled tracing,” says Makhubela, adding that he is hopeful that the centralised fund should be up and running before the end of 2022. “The problem of unclaimed retirement benefits should not be a major issue in the future given the common use of cell phones across all demographics and better record keeping by the industry.”
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