Ciaran Ryan | GroundUp | 19 November 2019 |
A campaign to reclaim billions of rands in unclaimed benefits is about to kick into high gear. The Unclaimed Benefits Committee (UBC), representing a group of claimants, and non-profit organisation Open Secrets, are planning to lobby Parliament.
“We will also be calling for a boycott of finance companies involved in withholding benefits,” says Thomas Malakotse, a member of the UBC steering committee. “The fund administrators have been making secret profits for decades by charging fees on these unclaimed assets, and they are accountable to no-one.”
The group plan to march to Parliament early in the new year.
In a recent investigation, Open Secrets found there was R42 billion in unclaimed pension benefits owed to more than four million South Africans, a country where 44% of pensioners live in poverty. If one adds funds not subject to regulation and supervision in terms of the Pension Funds Act, the amount of unclaimed benefits is closer to R51 billion.
Billions then in the financial system belong to people who have yet to be tracked down. Nor does there seem to be much serious effort going into tracking them down. Michael Marchant of Open Secrets says he is surprised that the damning report has not elicited a response from the Financial Services Conduct Authority (FSCA) which is the regulatory body in charge of pension funds (previously the Financial Services Board). Malakotse says the UBC has no intention of allowing the report to be buried.
This is not a typical story of corruption, says the Open Secrets report. It says it stems from the perverse incentives built into the pension fund industry. The administrators – private companies appointed by the trustees – are responsible for chasing down unclaimed benefits but are also the ones who earn hefty fees on administering unclaimed benefits. So long as the pension funds remain unclaimed, the fund administrators can continue to extract fees, year after year.