Tracing the owners of unclaimed treasures

On 19 August, the Financial Services Board (FSB) released the figures that there are R20 billion in unclaimed benefits in the industry.

Many people within the industry were quite shocked about this number and asked many pertinent questions. FAnews spoke to Rosemary Hunter, Deputy Registrar of Pension Funds at the FSB, to clarify some issues around unclaimed benefits.

Fund consolidation

The first issue we need to clarify is whether the rapid increase in the number and aggregate value of unclaimed benefits held by funds is a reflection of any acts by role players in the industry that put members in a compromising position.

While she maintains that many funds are not doing enough to trace and pay beneficiaries the amounts due to them, Hunter points out that the significant increase in the numbers is probably attributable to better reporting of unclaimed benefits. “There was a big move from companies a few years ago to shift their employees from stand-alone funds to umbrella funds. However, in many cases, the stand-alone funds were not properly wound up,” says Hunter.

Instead, they remained dormant because they had no boards of trustees to deal with their remaining assets and liabilities, including those for unclaimed benefits. The Registrar has encouraged the funds’ administrators to try to get the businesses of these funds wrapped up so that their registrations can be cancelled.

The fact that this project has been underway for almost eight years (engagement with funds over this issue began in 2007) and still has not been finalised suggests that the issue is more complex than we realise. Hunter adds that the job has to be done properly to protect the interests of members and beneficiaries and therefore not be rushed.

A case of not knowing

Why are there so many unclaimed benefits? Where are the people that this money needs to go to and why can’t they be found?

Hunter points out, “For many reasons, including negligence on the parts of employers and fund administrators, many funds do not have complete, accurate and up-to date member data Including information needed to make contact with those members or their dependants.”

“Other reasons include a lack of expertise or resources by funds to trace beneficiaries and ignorance on the part of members who had been dismissed from employment of their rights nonetheless to claim their retirement savings,” she says.

Legacy issues

The FSB reports that a recently conducted review in the mining industry found that this industry alone has R5.2 billion in unclaimed benefits which is owed to 200 000 people.

The South African economy has always been built off the back of a strong mining industry. History shows that the majority of the workers in this industry are migrant workers from neighbouring countries. While the bread winner works in South Africa, the family usually stays behind in the country of their birth. 

“The difficulty of claiming a benefit due by a South African fund from another country complicates matters as there may be cases of incomplete forms that funds have to deal with. There is also the issue that funds simply do not have the necessary resources (funding or administrative) to track the families of the deceased workers down; particularly if we are dealing with families in foreign countries and/or rural areas,” says Hunter.

Where to from here?

So where do we go from here? How do we get the necessary feet on the ground in order to get this money to its rightful owners?

Hunter is adamant that, “There needs to be a specific point person identified for each fund to whom enquiries about unclaimed benefits may be directed. The issue of a role dedicated to a specific person to handle these enquiries has been an issue that the FSB has been encouraging the industry to do, and it is finally making headway as many of the major funds now have a point’s person dedicated to this role. The FSB can also be contacted if there are any queries regarding unclaimed benefits.”

She adds that the FSB is also in the process of establishing a searchable central database which will allow a member, or families of a deceased member, to enter identity information on the basis of which the enquirer may be informed that an unclaimed benefit may be (but will not be guaranteed to be) due to the person and to whom enquiries in relation to the matter may be directed.

Editor’s Thoughts:
While this may be a legacy of a flawed system that was used in the past, tracing the members that are entitled to these benefits provides the industry with an opportunity to write a new legacy.The task ahead does seem monumental. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.