R42bn owed to SA citizens in unclaimed pensions

By Garth Theunissen for Business Insider SA

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.

“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.

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