Draw up a policy for unclaimed benefits
There are millions of rands of unclaimed benefits in the retirement fund industry. And many beneficiaries are unaware of monies due to them! The reasons for this unfortunate state of affairs are varied; they include illiteracy, ineffective communication from funds and employers alike and inaccessibility to facilities for people living in rural areas.
The matter of unclaimed benefits has become an urgent issue that demands practical solutions, both within individual retirement funds and the industry as a whole. Take death benefit funds paid into umbrella trusts as an example. When a member of a retirement fund passes away, the trustees of that fund have a fiduciary responsibility to establish the whereabouts of the dependants of the deceased. Not only is it frequently impossible to trace dependants, but they are also not necessarily only the persons stated in the deceased's nomination form (which is often not kept updated in any case). Retirement-fund trustees are therefore faced with huge challenges in tracing dependants.
Once the retirement-fund trustees have determined who the beneficiaries are and have paid the funds for minors into an umbrella trust, the responsibility of maintaining contact with the beneficiaries falls to the trustees of the umbrella trust fund.
An umbrella trust administrator should draw up a proactive policy that outlines how unclaimed benefits will be treated. The policy should include ongoing communication with all stakeholders, as well as short- and long-term investigation procedures.
Short-term procedures
The umbrella trust administrator should insist on a minimum level of information from retirement-fund trustees prior to the establishment of a sub-account within an umbrella trust. (It sometimes happens that monies are paid into trust without any accompanying documentation from retirement-fund administrators.
The umbrella trust administrator should maintain accurate records. For example, Fairheads Umbrella Trust Company sends beneficiary information forms to both guardians and beneficiaries on an annual basis, confirming their details as reflected on its database. If the details are not verified or corrected within ninety days of receipt, monthly income distributions may be suspended. This may sound harsh, but it is clearly the best way to ensure accurate records. If the forms are not returned, the next step is to attempt to trace beneficiaries through past correspondence and contact with the fund and/or the employer.
Longer-term procedures
Such short-term actions will help to avoid the more costly option of employing the services of a tracing agent. If such an agent is used, administrators should follow a careful selection process to ensure that they get value for money. Does the tracing agent have a proven track record in finding beneficiaries who live in rural areas and neighbouring states? Services offered may include:
* Tracing of individuals by means of radio, letters, notice boards at offices and a "traditional chiefs and leadership" network
* Interviewing dependants
* Assisting guardians to complete forms and understand the benefits payments system
* Helping to appoint an executor and a new guardian if a guardian passes away
* Physical visits to the last-known address.
Should the process fail to trace a beneficiary within five years of when s/he became entitled to the benefit, the funds will be paid to the Guardians Fund with full disclosure of all relevant information, including attempts made to trace the beneficiary. This is in accordance with the Administration of Estates Act.
A comprehensive policy such as that described above will go a long way towards ensuring that beneficiaries receive the benefits to which they are entitled.
