An estimated R20 billion of unclaimed benefits in retirement funds has spawned a number of “dodgy organisations” and an industry of lawyers and tracing agents who earn fees for helping members to claim benefits that they could receive without being charged a cent.
This is the view of Rosemary Hunter, the Deputy Registrar of Pension Funds at the Financial Services Board (FSB), and Muvhango Lukhaimane, the Pension Funds Adjudicator.
Hunter told the Institute of Retirement Funds Africa (IFRA) conference held in Cape Town recently that the FSB was drowning in queries from the public since reports about unclaimed benefits appeared in Personal Finance and other newspapers.
The R20 billion is the estimated amount in private-sector funds only; there are also billions of rands of unclaimed benefits in funds not supervised by the FSB, such as the Government Employees Pension Fund and other state funds.
There are many reasons why billions of rands are still unclaimed, including a failure of employers and funds to provide information about benefits, poor administration, foreign workers owed benefits being forced to leave the country soon after their work permits expire, a failure by members to inform their dependants that they can claim benefits after their death, and a failure by funds to trace members. In addition, many funds have had surpluses to distribute, and former members may be unaware that they have been allocated a portion of the surplus.
Hunter said the FSB wants advice centres, trade unions and community organisations to help, without cost, unite former members and/or their dependants with the benefits that are due to them.
Hunter says there are also a lot of “dodgy organisations” that make money off people who don’t know how to claim their benefits.
Hunter says the actions of these organisations are “outrageous”. She says two of them demanded that the FSB give them access to its information on funds with unclaimed benefits and shares of surpluses.
The FSB is currently working with retirement fund administrators to create a database of information on unclaimed benefits.
Lukhaimane told the conference that funds that do not respond to members’ requests and complaints are “spawning an industry that is further exploiting members”.
She says almost 30 percent of all complaints to her office are the result of attorneys or tracing companies contacting members and beneficiaries with a promise to find their long-lost benefits.
Lukhaimane says that sometimes when her office orders funds to pay out benefits, the funds argue that the claims have prescribed (in other words, they have lapsed because too much time has passed) and provide long arguments about how benefits have “reverted to the fund”.
But “all benefits belong to someone with a name, a life, a family. Why can’t you just do your basic job and go and find them, as you should have years ago?” Lukhaimane told the trustees at the conference.
Hunter says a claim for a benefit only prescribes three years after you become aware of your right to it.
Currently, funds are legally obliged to hold some provison for unclaimed benefits in the fund in which they arose, or in an unclaimed benefits fund, or to transfer them to the Guardian’s Fund, even if it is highly unlikely that the beneficiaries will ever be traced.
Recently, Tony Mostert, the liquidator of the Picbel Groepvoorsorgfonds, one of many funds from which surpluses were plundered, applied to the Gauteng High Court to have a regulation that requires funds to keep shares of surpluses in the fund or a reserve fund declared “beyond the law”.
The Minister of Finance has plans to oppose the application, but the Registrar of Pension Funds has not yet decided whether to oppose it.
The Association of Savings & Investment SA is working on a standard level of tracing that its member financial services companies should maintain to find the owners of unclaimed retirement benefits.
HOW TO CLAIM BENEFITS THAT ARE DUE TO YOU
If you know the name of the fund which owes you benefits, contact the fund directly, Rosemary Hunter advises. Some funds or their administrators have unclaimed benefits forms you can complete.
If you don’t know how to contact the fund or you don’t know the name of the fund, you can contact the FSB’s call centre 0800 20 20 87 or 0800 110 443, or email [email protected]
One large tracing agent, the Data Factory, offers a free service in terms of which you can submit your details for them to check if benefits are due to you on its website: www.unclaimedbenefits.co.za
The Data Factory receives listings from funds that have unclaimed benefits.
You will need documents proving membership of the pension or provident fund to which you or a deceased member belonged.