R81 billion of unclaimed benefits: is some of it yours?

IT’S HARD to believe that there is a huge pot of money – around R81 billion – that South Africans (and foreign nationals who worked here or their descendants) could be using to improve their lives, that they don’t know they are owed.

I am referring to unclaimed retirement fund benefits of over R47 billion and unclaimed insurance and investment assets of about R34 billion as at the end of 2021, according to the Financial Sector Conduct Authority (FSCA) and the Association for Savings and Investment South Africa.

This money is sitting in retirement funds and on the books of insurance companies and asset managers, accumulating interest, but also incurring investment management and administration fees.

There are ongoing efforts by the financial services industry and its regulator, the FSCA, to trace the rightful owners of these assets. But the truth is that the bulk of this money may never be united with its rightful owners. The benefits span several decades. Many direct beneficiaries will have died, and although their descendants may be able to claim, they are unlikely to know much about a late relative’s finances or what pension fund he or she belonged to.

The trouble is that the administration and record-keeping relating particularly to members of retirement funds (and within this space, particularly in the mining industry) were pretty slack in the past.

Jeanine Astrup, a consulting actuary and member of the Actuarial Society of South Africa Retirement Matters Committee, says that most retirement funds and their administrators are working with tracing agents in an effort to whittle down the unclaimed assets. However, this comes at a significant cost.

“The more specialised and intense the search for beneficiaries of unclaimed retirement benefits, the higher the cost implications. Cases where ID numbers, dates of birth, or surnames differ, require further investigation. This has time and cost implications.”

Astrup says fund trustees and administrators could probably do more to unite former members and beneficiaries with their benefits but says that individuals can also play their part.

If there is a possibility that you stand to benefit, Astrup says you need to take note of the following:

¡ Surpluses for members of defined benefit funds pre-2004. Under the Surplus Apportionment legislation, which came into effect in the early 2000s, many former members who were entitled to a share of any surplus in the fund were not traceable. “Many unclaimed surplus benefits date back to the years preceding the digital age. Old payroll systems, some of which were not even electronic, did not capture ID numbers, seldom had first and second names, and rarely recorded gender. There was no such thing as system verifications, and information was often captured incorrectly or not at all.” Astrup says former members of defined benefit funds or their beneficiaries who believe they might have a claim should contact their previous employers.

¡ Differentiate between scams and genuine tracing efforts. “With all the scams out there, it is no surprise that members are sceptical when, out of the blue, they receive a phone call or email advising them that the employer they left five, 10 or even 20 years ago would like to pay them money,” says Astrup. Don’t dismiss these approaches out of hand, and try to differentiate between a genuine call and a scam (see box). ¡ Understand why you may have become untraceable. Astrup says tracing is often successful for former retirement fund members who are still employed and living in the country. But it’s far more difficult to trace former members who have left the country, no longer work and rely on their children for financial support, or who have since remarried and changed their surname once or possibly twice. ¡ Do a search on the FSCA website. The FSCA has an unclaimed benefit search engine on its website. Astrup suggests you use different variations of your personal details that may have been on record at the time. “Your details may have been captured using your first name and middle name, or possibly your first name and an initial. If you had a different surname at the time, remember to enter your details as they could have been on record when you were a member of a fund.” She also points out that many of the big retirement fund administrators have their own unclaimed benefits search mechanisms on their websites.

¡ Ensure that you or your beneficiaries do not become untraceable. Astrup says people sometimes do not realise that they are a member of their employer’s pension or provident fund and when they resign, they simply walk away from their benefits. First, you should

check with your employer whether you belong to a retirement fund. If you do, read the fund rules, understand who pays the contributions and find out about benefits such as life and disability cover. Second, always complete the beneficiary nomination

form, which will guide the fund trustees on what should happen to your retirement savings if you die while you are a member of the fund. Last, leave copies of these documents with a trusted member of the family or your financial adviser.