Estimated R20bn owed to roughly 3.5m beneficiaries.
This is according to the latest Annual Report of the Registrar of Pension Funds.
Source: Financial Services Board (FSB)
Rosemary Hunter, deputy registrar of pension funds at the FSB, says a recent survey suggests the average amount of unclaimed benefits held by an unclaimed benefit fund (not the original pension fund) is roughly R5 000.
While R5 000 is not a significant amount of money, for a lot of South Africans it would offer the opportunity to send a child to school or to pay for a taxi ride to apply for a job, she says.
Hunter says there are about 50 “active” registered unclaimed benefit funds. Others have been registered, but are still getting off the ground.
These funds have an estimated R4.6 billion in unclaimed benefits owed to around 792 000 beneficiaries. Most of the unclaimed benefits are parked in the original funds in which these benefits accrued and only about a quarter is held in unclaimed benefit funds.
Reportedly, about 60% of unclaimed benefits in mining industry funds are for foreign workers which include people who had to leave the country when their visas expired. This has made it difficult for them to claim their benefits.
The statistics do not include unclaimed benefits of the Government Employees Pension Fund (GEPF), which apparently has about R500 million in unclaimed benefits of its own. It also excludes Telkom’s pension fund, the Post Office retirement fund, the three Transnet retirement funds and a few other funds.
Why beneficiaries don’t claim
Hunter says a lot of member data maintained by pension funds and administrators are incomplete and aren’t kept up to date – for example when mobile numbers change.
Some funds also seem to have a lack of expertise or resources to trace beneficiaries and unfortunately one of the consequences of this is that a lot of people have set themselves up to be intermediaries – offering to claim benefits on behalf of beneficiaries in exchange for a portion of the benefits.
Hunter says while pension funds may hire intermediaries, members shouldn’t be signing up to pay people to claim their benefits.
“They are entitled to get their benefits for free. If the funds want to hire people to go out and trace [beneficiaries] they can do that – then the funds must pay [the intermediary]. But unfortunately a lot of people think that they can’t make a claim unless they go through a lawyer or some financial services provider and that means that they lose a lot of value.”
Some people aren’t aware that they are entitled to the benefits. This include instances where members were previously fired for misconduct or may be deceased.
“Our law says that your rights to your pension benefit are completely separate to your rights to remuneration.”
There are also cases where employees have already left the organisation and the employer don’t see the benefit to assist in finding the beneficiary.
“Particularly if they left on bad terms the employers can be very unhelpful.”
There are also instances where members believe the amounts are too small to claim, they may not want to provide personal payment information to the fund or its administrator or are trying to avoid tax-related issues.
What beneficiaries should do
Where members suspect that they have unclaimed benefits, the first port of call should be their former employer, which will most likely be in the best position to identify the fund to which the member belonged.
Hunter says if the employer can’t help or doesn’t exist anymore, beneficiaries should contact the fund or administrator if they know these parties. Payslips or benefit statements may point beneficiaries in the right direction.
If these efforts don’t deliver results, beneficiaries can also contact the FSB by sending an e-mail to firstname.lastname@example.org.
Hunter says the FSB is often approached first, but unfortunately it does not have the capacity to deal with the significant number of queries.
The FSB’s call centre currently deals with more than 1 000 queries related to unclaimed benefits every month.
“We would like to encourage people to go first to their employers and funds and administrators if they can. But we will try and help if that doesn’t yield anything.”