FSB says unclaimed billions lie in pension funds

Billions of rands could be lying unclaimed in pension funds, according to the Financial Services Board (FSB).

The FSB has been collecting information on unclaimed pension benefits from funds over the past three years. So far, only 967 funds out of the industry's 16 000 have submitted information to the board.

However, the unclaimed benefit total already stands at R970 million for 135 479 members.

Dube Tshidi, the deputy executive for retirement funds, said the amount outstanding was expected to run into billions of rands if all the funds were accounted for, and millions of beneficiaries could be owed "The unclaimed benefit total stands at R970m for 135 479 members".

Tshidi blamed legacy issues for the staggering unpaid benefits, adding that the majority of unclaimed pension benefits had accrued to black, blue-collar workers.

Until fairly recently, black workers' rights were often ignored and when they were fired they often left without claiming their pension benefits. The most affected were migrant workers, who had no permanent addresses in the major urban centres.

Tshidi added that the use of single postboxes for entire rural communities also led to a large number of pension cheques sent to members going stale as no one cashed them.

The payment problem was aggravated by the fact that some members had no bank accounts.

The lack of representation in trustee boards made it worse for the migrant worker fund members as nobody could see to their problems.

Anesh Soonder, the acting chief executive of the Institute of Retirement Funds (IRF), said the problem of unclaimed benefits had been an issue for some time. He said the FSB had not approached the IRF yet.

Soonder expressed doubt that the FSB had up-to-date contact details of pension funds, saying the poor response to the survey conducted by the pensions authority was evidence that it might not.

The FSB should do an audit on the retirement funds contact data, as it was likely that some of the correspondence sent to the retirement funds was going astray, he said.

Soonder said trustees should ensure administrators were held accountable for the submission of information to the FSB.

Both the FSB and Soonder highlighted the issue that some members who did not claim their money were not aware that they had made contributions while in employment.

The chairman of the National Consumer Forum, Thami Bolani, said communication channels on financial services were not accessible to low-income earners, the very group affected by unclaimed benefits.

He cited the unclaimed shares after the demutualisation of life insurers Old Mutual and Sanlam, where it was mostly historically disadvantaged groups that were affected.

The language used in communicating about these benefits was not understood and the beneficiaries had no idea what they were owed, he said.

Bolani said the FSB should publish the names of the people owed money by pension funds in media that was easily accessible and in languages that were understood by the affected groups.

There was also a need to increase the representation for low-income groups on pension fund boards. The current level of activism was not sufficient to cater for these interests.

Tshidi was "not convinced that trustees and administrators have done their best in tracing members".

Alan McCulloch, an executive at the Institute of Financial Planners, said some pension fund members did not claim because they feared being traced, particularly those who had not registered with the tax authorities.

McCulloch, however, did acknowledge that some people were not traceable, even with the services of tracing agencies.

There was a need to improve procedure at termination of employment or retirement to reduce the incidents of unpaid terminal benefits, he said.

Click here to go to the FSB website to see if any of your clients are listed.

With thanks to: Business Report www.busrep.co.za/index.php?fArticleId=3143526