Unclaimed benefits: ‘make yourself traceable’

There’s a pot of nearly R50 billion of unclaimed benefits in retirement funds. Some of it could be yours…

There’s a pot of nearly R50 billion of unclaimed benefits in retirement funds. Some of it could be yours…

Published May 18, 2023


Retirement fund actuaries are urging South Africans to make themselves traceable by retirement funds trying to unite former members and beneficiaries with billions in unclaimed benefits.

By the end of last year, unclaimed benefits worth R47.3 billion were sitting in retirement funds, says the Financial Sector Conduct Authority (FSCA).

Jeanine Astrup, a consulting actuary and member of the Actuarial Society of South Africa (ASSA) Retirement Matters Committee, says most retirement funds and their administrators are working with tracing agents in an effort to whittle down the unclaimed assets. This comes at a significant cost for retirement funds, she adds.

“The more specialised and intense the search for beneficiaries of unclaimed retirement benefits, the higher the cost implications. Cases where ID numbers, dates of birth or surnames differ, require further investigation by potentially the employer, fund and administrator. This has time and cost implications.”

Astrup says retirement fund trustees and administrators could probably do more to unite former members and beneficiaries with their unclaimed benefits. However, she add that individuals also have an obligation to ensure that they are traceable.

“While it may seem incomprehensible that retirement fund members could simply ‘forget’ about their benefits, the size of the unclaimed benefits pot shows that this is not uncommon.”

Astrup says there are several steps former retirement fund members and their beneficiaries can take to make it easier for retirement funds to unite unclaimed benefits with their rightful owners.

Members of defined benefit funds pre-2004

Astrup says a portion of unclaimed retirement fund benefits was generated by defined benefit funds that declared a surplus in terms of Surplus Apportionment legislation to members who left these funds after 1980, but where trustees were unable to trace former employees.

“Many unclaimed surplus benefits date back to the years preceding the digital age. Old payroll systems, some of which were not even electronic, did not capture ID numbers, seldom had first and second names, and rarely recorded gender. Even where information was captured, there was no such thing as system verifications, and information was often captured incorrectly.”

Astrup says former members of defined benefit funds should contact their previous employers if all of the following apply:

• You withdrew from a defined benefit fund before 2005 (the last surplus apportionment date was November 30, 2004).

• You have not been paid an additional surplus benefit.

• You have not confirmed that your former fund did not undertake a surplus allocation.

If you are a beneficiary of a former member of a defined benefit fund who has died, and you believe that the above apply, you should take up the cause, says Astrup.

Differentiate between legitimate approaches and scams

“With all the scams out there, it is no surprise that members are sceptical when out of the blue, they receive a phone call or email advising them that the employer they left five, 10 or even 20 years ago would like to pay them money,” says Astrup.

She adds, however, that dismissing legitimate approaches by tracing agents makes it difficult for retirement funds to unite people with their benefits. She therefore urges consumers to do their homework before dismissing an approach from a tracing agent. (For tips on how to verify that a tracing agent is legitimate, see “Identifying a legitimate agent”, below.)

Astrup says agents have to request personal information, such as ID and bank account details, in order to facilitate the payment of your benefits.

“If you are worried that the request may be a scam, ask for the administrator’s email address so that you can send your documents to the administrator directly. Again, make sure that the email address looks legitimate and is not a free web-based service like Gmail or Hotmail.”

She says a tracing agent will never need your bank account login details or any PINs from your bank.

Understand why you may have become untraceable

Astrup says “desktop” tracing is often successful for former retirement fund members who are employed and living in the country.

“However, these ‘first-level’ traces become less useful for former members who have left the country, no longer work and rely on their children for financial support, or who have since remarried and changed their surname once or possibly twice. Even more complicated is tracing former members who passed away after having left South Africa.”

Astrup says people often believe that if they were owed money by a retirement fund, they would have been contacted and informed of their windfall.

“This is not a given and if there is any doubt, there is no harm in making contact with your former employer or with the principal officer of the retirement fund in question.”

The FSCA has created an unclaimed benefit search engine for individuals who did not receive a benefit payout when they left employment. Astrup encourages members of the public to use the search engine and to use different variations of their personal details that may have been on record at the time.

“Your details may have been captured using your first name and middle name, or possibly your first name and an initial. If you were using a different surname at the time, remember to enter your details as they could have been on record when you were a member of a specific fund. If your employer used to have your date of birth recorded incorrectly, try using the date of birth that they would have had on record.”

She also points out that many of the big retirement fund administrators have their own unclaimed benefits search mechanisms on their websites.