R90bn in unclaimed assets

REGULATOR: PHENOMENON MOSTLY IMPACTS THE MOST VULNERABLE PEOPLE IN SOCIETY

Financial Sector Conduct Authority suggests centralised data base of funds.

The total value of unclaimed assets in SA is now about R90 billion – with roughly half of that being unclaimed pension funds. Collective investment schemes and life insurers hold a further 38% of unclaimed assets.

Financial Sector Conduct Authority (FSCA) commissioner Unathi Kamlana said on Wednesday the quantum of funds unclaimed across all financial sectors remains a concern, though good progress has been made in tracing beneficiaries in recent years.

In 2020, 97 227 pension fund beneficiaries were paid out R3.45 billion. This brings the total unclaimed benefits paid during the decade from 2010 to 2020 to about R37.7 billion, to more than 1.3 million beneficiaries.

Despite the increase in value of unclaimed benefits over time, the number of members with

unclaimed benefits has declined since 2018.

Central securities depository participants, responsible for processing dividend transfers, had unclaimed assets of R4.5 billion belonging to 391 000 account

holders in 2019.

The five banks canvassed by FSCA had 5.7 million dormant accounts with R3.36 billion in funds.

While every effort is reportedly being made to track down the rightful owners of these assets, the FSCA recommends establishing a centralised database of unclaimed funds.

It also recommends a dedicated “central unclaimed assets fund” to receive and manage unclaimed assets.

Alternatively, the funds should be transferred to the National Revenue Fund for management, in preference to leaving them under the control of financial institutions.

These unclaimed funds could be invested for the public good, focusing on social, environmental and developmental upliftment.

FSCA also proposes a minimum threshold for unclaimed assets, below which assets will not be actively traced.

Kathy Gibson, deputy commissioner at FSCA, said it was unfortunate that the people most impacted by the phenomenon of unclaimed assets are the most vulnerable.

“We don’t profess to have all the answers but want to have robust and wider engagement about how to locate beneficiaries and minimise the build-up of these unclaimed assets over time.”