Workers owed billions in unclaimed benefits

WORKERS across Southern Africa are owed billions in unclaimed benefits but it’s proving to be difficult to trace them.

So says the Financial Services Board (FSB), which released figures this week that pension fund administrators have R42 billion in unclaimed pension and provident fund benefits.

The funds are owed to 3.5 million beneficiaries who don’t know they have the cash in various interest-bearing accounts. About 2.8 million of them are in South Africa and the rest are in the SADC region.

Most of the unclaimed benefits arose from the mining, motoring, metal and engineering industries, said Loraine de Swart, FSB assistant manager of retirement funds.

The FSB and the Registrar of Funds sounded a warning against “unscrupulous operators” who had tried to con people into paying them R1 200 to trace their money.

De Swart said: “These are often empty promises and there is absolutely no guarantee that the person paying that amount is due any money.

“The FSB has placed a number of warnings in newspapers and visited affected communities to make it clear that the FSB is able to assist with inquiries free of charge.”

Since 2015 the FSB, together with fund administrators, has set up a national database to track beneficiaries but it is ultimately the responsibility of fund administrators.

Many funds have now employed tracing agents to find the beneficiaries.

“The tracing of unclaimed benefits is further hindered by the huge number of migrant workers that were employed either as illegal immigrants or those not willing to provide their true identities as this could have resulted in their not finding a job or being sent back to their countries of origin.”

In instances where beneficiaries are not traced, the money is placed in an unclaimed benefits trust.

De Swart said a regulation had been introduced in 2001 to compel employers to provide funds with member details, including full name, date of birth, ID number or employee/pay number, or other means of identification.

“Funds should therefore maintain accurate membership data and contact details of its members.”

But a consultant for Commsure Financial Solutions, Patrick Odendaal, said in some cases administrators were tardy in tracing and paying beneficiaries so they could continue to claim service charges.

For example, if a beneficiary had an unclaimed benefit of R5 000 over a long period, the entire benefit could be swallowed up by administrative charges.

This practice had been outlawed since 2007 by the Registrar of Funds in an attempt to preserve as much of the unclaimed benefits as possible for members.

However, the practice had continued.

Odendaal did, however, agree with the FSB that administrators faced many hurdles and called on the industry to do much more to trace and pay beneficiaries.

One way would be for fund administrators to share databases, and tap into the databases of Sassa and major retailers such as Edgars.

Odendaal said the unclaimed benefits ranged from R5 000 to tens of thousands of rands a person.

According to the report released by the FSB this past week, just a little over R22 billion rand had been paid out to 934 000 members in the past five years, but a staggering amount was left in the kitty.

Weekend Argus approached five of the big fund administrators, Liberty Life, Old Mutual, Alexander Forbes, Momentum and Sanlam, to find out about the progress of their tracing and payments and also what their administrative charges are per member.

At the time of going to print, three of the five had responded to queries about tracing and paying benefits and just one replied to the question about admin charges.

Emile Huge, Momentum’s principal officer of unclaimed benefit funds, said an unclaimed benefit is defined in the Pension Funds Act as one that had not been claimed for two years after it became due.

“The combined membership of Momentum’s two unclaimed benefit funds was 59 354.

“Over the past five years we have successfully traced and paid 49 318 members.”

Hugh Hacking, Old Mutual corporate general manager of operations, said as at June 30 the company had a little under 100 000 members in the unclaimed benefit preservation pension and provident funds and they employed three independent tracing agents.

Danie Scholtz, Sanlam’s head of marketing, said the company’s employer benefits department administered approximately 100 funds with more than a million members.

The Unclaimed Benefits Provident Preservation Fund, with 28 216 members, had an assets value of just under R287m.

The Unclaimed Benefits Pension Preservation Fund had 21 922 members with an asset value of just over R378m.

Scholtz said Sanlam employed tracing agents. also

Patrick Odendaal