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FSCA proposes a central fund for unclaimed pension benefits



Published Sep 7, 2021


Financial benefits that remain unclaimed by their rightful recipients are part and parcel of the financial landscape in most countries, but South Africa has a particular problem in this regard, which stems back to the apartheid era and migrant labour in our industries, particularly on the mines.

In a recent media presentation, the Financial Sector Conduct Authority (FSCA) updated journalists on, among other things, the position regarding unclaimed pension benefits, and outlined a proposal to have a centralised fund in which to house the money.

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Takalani Lukhaimane, manager of conduct supervision of retirement funds at the FSCA, said that at the end of the 2019 financial year the retirement industry was sitting on R44.9 billion of unclaimed pension savings belonging to over four and a half million people. This money is scattered across hundreds of occupational retirement funds and a smaller number of special-purpose unclaimed benefit funds established by fund administrators.

A benefit becomes "unclaimed" if it has not been claimed by the member or a beneficiary within two years of it becoming due.

Unclaimed benefits make up 1.7% (an increase from 1.67% in 2018) of total retirement fund assets in South Africa. The average benefit per member is roughly R10 000. However, Lukhaimane said it was estimated that just over a quarter (26.5%) of individual benefits had a value of less than R250.

She said that over 10 years to 2019, R34.3 billion was paid out to 1.2 million claimants, with higher figures during the past six years, indicating that efforts by the industry to trace and pay beneficiaries have had some success.

The most successful method of reuniting members or beneficiaries with their rightful pension savings has been the FSCA's dedicated website search page (see “Where to find out about unclaimed benefits”).

Lukhaimane said that while efforts to trace beneficiaries had been stepped up, the reality was that a large portion of the money would never be claimed. There are two main reasons for this:

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1. As noted above, many claims would be for less than R250, and members may, even if aware of the benefit, not bother to undertake all the paperwork for such a small amount. In many cases, the member would have been paid out his or her pension benefit, and the small amount remaining in the fund may have been some extra interest that had accrued before the account had been closed.

2. Many benefits date back decades to the apartheid era and migrant labour, when poor records were kept and people even worked under false identities to side-step immigration and apartheid laws. Finding these members or their descendants, many of whom would be residents of neighbouring countries, would be virtually impossible.

Centralised fund

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Lukhaimane said that last year her division researched a sample of funds with the highest unclaimed benefits. It found that, generally, there was inconsistency in how funds managed unclaimed benefits and in their approach to tracing claimants.

Zareena Camroodien, head of retirement fund governance and trustee conduct at the FSCA, then put forward the FSCA’s case for a centralised fund, which would house all unclaimed benefits and would actively try to find the rightful owners of those benefits. This approach is in line with the FSCA's attempts to consolidate and streamline the retirement fund industry by reducing the number of stand-alone occupational funds and encouraging the use of larger umbrella funds.

“From the FSCA’s perspective, it seems that funds are not making the necessary efforts to trace members and beneficiaries who have unclaimed benefits. Further, the perception exists that administrators lack the incentive to trace beneficiaries and pay out unclaimed benefits because it means the benefits remain in the fund for longer, incurring administration and investment fees. And having different funds housing unclaimed benefits makes it difficult for members or beneficiaries to locate these benefits,” Camroodien said.

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The proposed Central Unclaimed Benefits Fund would be run on a not-for-profit basis. By centralising benefits and tracing operations, people would have a central access point through which to make enquiries and lodge claims. (The problem currently is that, although a central database is already in operation, many descendants of members don’t know to which fund their late parent or grandparent belonged.)

While members and beneficiaries would have a claim in perpetuity, where the board was unable to find or trace members or beneficiaries, unclaimed benefits might be utilised for social good, such as building libraries or schools.


While pension benefits make up the largest portion of total unclaimed financial benefits in South Africa, there are also life insurance companies with unclaimed insurance and investment benefits on their books, as well as unclaimed benefits in the Guardian’s Fund, which houses assets inherited by minor children.

  • Retirement fund benefits: the best place to start is the FSCA’s search page on its website
  • Life insurance and investment benefits: The Association for Savings and Investment South Africa (Asisa) estimated that, in 2019, there were unclaimed assets of about R17.1 billion in risk policies, savings and investment policies, annuity policies and accounts in collective investment scheme portfolios. Asisa members adhere to the association’s Standard on Unclaimed Assets, which encourages the use of enhanced tracing procedures so as to keep unclaimed assets at a minimum and guides members on how to treat unclaimed assets. There is no centralised database: you would have to contact an insurance company or asset manager directly.
  • Guardian’s Fund: Once children reach the age of majority (18 years), unless otherwise stipulated in a will, they are entitled to be paid out their inheritance. In September each year, the Department of Justice and Constitutional Development publishes on its website lists of unclaimed funds in all the High Court districts in South Africa, together with details on how to claim. Go to