Budget 2026: Centralised unclaimed benefits proposal must address governance and data challenges

The proposal outlined in Budget 2026 to establish a centralised administrator for unclaimed retirement benefits has the potential to improve efficiency, but its success will depend on how key structural and governance challenges are addressed.

Henré Prinsloo, Head of Employee Benefits at Momentum Corporate, says the scale of unclaimed benefits in South Africa makes reform necessary, but centralisation alone will not resolve the underlying issues.

“With approximately R88 billion in unclaimed benefits across retirement funds and insurance contracts, the problem is substantial,” says Prinsloo. “A centralised administrator could create a more consistent and coordinated approach to tracing, verification, and payment of beneficiaries.”

He notes that one potential advantage of centralisation is efficiency. “A single, uniform approach to tracing members, beneficiaries, and estates may lead to cost savings and improved outcomes compared to the fragmented methodology currently in place across the market.”

However, Prinsloo cautions that several practical considerations must be carefully evaluated. He believes timing is critical.

“Every day that beneficiaries remain untraced, the pool of unclaimed benefits grows. Establishing a central administrator will require a detailed legal and regulatory framework. That process is likely to take years, during which the problem could continue to escalate.”

Operational complexity is another key concern with numerous existing unclaimed benefit funds and administrators, each using different tracing systems and processes. “Transferring funds, records, and responsibilities into a single central structure will be a significant undertaking and could take considerable time to implement effectively.”

Prinsloo also emphasises the importance of governance. “Whenever large sums of money are involved, governance structures must be exceptionally strong. Clear oversight, transparency, and accountability will be essential to safeguard these assets and maintain public trust.”

Importantly, he believes that administration may not be the core challenge.

“The fundamental issue is often a lack of reliable information. Many individuals left employment years ago or have passed away, and their beneficiaries may not even be aware that benefits are due. Centralising administration does not automatically solve historical record-keeping and data limitations.”

While several platforms currently allow individuals to check for unclaimed pension benefits or dividends, the majority of funds have remained unclaimed for extended periods.

“This raises a broader policy question,” says Prinsloo. “After exhaustive tracing efforts and advertising over a defined period, should these funds remain in perpetuity in a central structure, potentially eroded over time, or should a mechanism be introduced to release them for broader societal benefit?”

He notes that any such decision would need to navigate complex legal considerations, but believes it is a discussion worth having.

“Currently, this capital is not benefiting anyone. In a country with significant capital needs, there may be ways for these funds to support social and economic development, while still protecting the rights of original beneficiaries.”

Prinsloo concludes that while the concept of a centralised administrator has potential merit, reform must address operational, governance, and data realities to ensure it delivers meaningful results.

“Centralisation may improve coordination, but it will not eliminate the core tracing challenges overnight. A balanced and carefully governed approach will be essential.”