Open Secrets’ Head of Investigations, Michael Marchant speaks to Sakina Kamwendo about the nearly R50 billion in Unpaid Pensions that belong to almost 5 million people in Southern Africa and the ways in which this deepening injustice can be addressed.

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Nearly R50 billion. That is how much greedy and negligent pension funds and pension fund administrators owe to almost 5 million people in Southern Africa in unpaid pensions.

Isaac Thokoane, one of the millions affected by this injustice, explained his pain about the failure to pay out pension benefits.

“I am angry and sad at the same time… you can’t expect a person like my father — or the rest of the people owed pension benefits — to work for so many years and then be deprived of access to their entitled benefits. It doesn’t make sense”, said Isaac speaking to the Daily Maverick.

While many elderly pensioners and their families continue to suffer without the pension benefits owed to them, fund administrators, asset managers, and other financial actors rake in fees, profiting from this great injustice. Pension fund administrators have tried to absolve themselves of responsibility by calling them unclaimed pensions. But this is an inaccurate description.

Administrators must take responsibility

“The administrators like to use the word unclaimed because they want to blame people but, as we know, many people have been trying to claim for years and still have not been paid,” said Dale McKinley, a steering committee member of the Unpaid Benefits Campaign (UBC).

“We say unpaid because when we say unclaimed, it puts too much responsibility on the victims of this injustice,” said our Head of Campaigns, Mamello Mosiana.

Mamello spoke to SAFM about the People’s Hearing on Unpaid Pension Benefits held at the Women’s Jail at Constitutional Hill last week. The People’s Hearing was organized by Open Secrets together with the UBC on the 13th of September.

Thomas Malokotsa, steering committee member of UBC spoke to ENCA about the failure of administrators to pay the claims to these pensions. Malokotsa explained that the UBC had been inundated with pensioners requesting assistance in getting their benefits paid out.

Malokotsa told ENCA’s Masego Rahlaga, “We are hoping to have all the pension administrators and the regulator (Financial Sector Conduct Authority) to sit and listen to the grievances of the people affected by this negligence.”

Victory towards justice for unpaid benefits

Open Secrets and the UBC had been agitating the FSCA to act against the unlawful “Cancellations Project” for four years. Effectively, the Financial Services Board (now FSCA), allowed pension fund administrators to cancel the registrations of thousands of pension funds when those funds still had money that was owed to beneficiaries. The cancellations project, we have argued, is one example of how the industry has been structured to benefit its dominant corporations while leaving pensioners and pension fund members in the dark.

Disappointed with the snail’s pace taken by the FSCA in tackling the unlawfully cancelled pensions, Open Secrets and UBC (represented by the Centre for Applied Legal Studies), launched an application in the Gauteng High Court to compel the FSCA to address the unlawful cancellation of pension funds swiftly, and to do so in an open and transparent way.

We are proud and disappointed to say that in the seven months since we launched the case, the FSCA did more than it had done in ten years to address the cancellation of pensions. Recognizing the progress made by the regulator in fulfilling its duties, we have now reached a settlement agreement with the FSCA.

Holding parliament accountable for unpaid pensions

The People’s Hearing was chaired by a panel including Amanda Rinquest (Black Sash), Shaeera Kalla (Activist), and Advocate Geoff Budlender SC. They led the hearings creating a space for affected parties like Thokoane to share their stories of how the injustice of unpaid pensions impacted their lives.

The panel made the following recommendations:

• The parliamentary portfolio committee on finance chairperson Mr Maswanganyi must invite Open Secrets, the Unpaid Benefits Campaign and Rosemary Hunter to present a way forward to address this national crisis which affects more than 5 million people.
• FSCA should zero rate its website and search engine tool to make it easier for beneficiaries to track their pensions.
• FSCA must fulfil its public duties and penalise fund administrators for non-compliance.
• There must be a serious exploration of psycho-social support for beneficiaries who are exhausted under the weight of this stress, and not being able to support their families and loved ones who have been robbed of the most basic comforts after the exploitation of working their whole lives, sometimes to the point of disability or death.

In solidarity,

Luvo Mnyobe (Campaigner)

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Civil Society organisations take Financial Sector Regulator to court

In December 2021, Open Secrets and the Unpaid Benefits Campaign (UBC), represented by the Centre for Applied Legal Studies (CALS), brought an application in the Gauteng High Court against the Financial Sector Conduct Authority (FSCA). In the spirit of greater transparency and responsiveness to the plight of pensioners, the application asks the Court to remedy the unlawful cancellation of pension funds. The FSCA has undertaken to file their response to our application by 16 May 2022.

The unlawful cancellation of pension funds saw fund administrators, enabled by the Financial Services Board (the FSCA’s predecessor), deregister thousands of funds, some of which owed pensioners and beneficiaries money. This occurred despite the fact that a deregistered pension fund cannot pay people what is owed to them. In order to remedy this, in 2019 the FSCA published Circular 1/2019, which requires private fund administrators to apply to court to reinstate all funds that were unlawfully cancelled. So far, out of potentially thousands of affected funds, only 48 have been reinstated over a period of more than a decade since their cancellation. Despite the apparent lack of compliance with the Circular, the FSCA has seemingly done little to enforce it.

Our application therefore seeks to ensure that the FSCA enforces its own obligations in an open and transparent manner and with the urgency required. Beneficiaries do not know what is happening and are prevented from accessing their benefits, resulting in financial harm that impacts entire families. The fact of the matter is that we also do not know who the beneficiaries of these cancelled funds are because of the lack of transparency and slow pace of the reinstatement process. What we do know is that there are over 4 million people who are owed their benefits, some of whom could be beneficiaries of unlawfully cancelled pension funds. Each year of delay also means more money accrues to fund administrators and asset managers, who sometimes derive fees from the unpaid benefits.

Through this court case, Open Secrets and the UBC hope that the reinstatements of funds happens expeditiously and transparently. This is the only way that affected beneficiaries will know what is happening to their hard earned pensions, and that the public can be assured that the FSCA is acting independently. We are asking the court to monitor the FSCA’s implementation of Circular 1/2019 to ensure that funds are identified and reinstated as a priority and not merely a relegated “special project”.

The FSCA is the oversight body for the financial sector, and its conduct has far-reaching consequences for all people in South Africa. A central responsibility of the FSCA is to protect the public interest and ensure that everyone is treated fairly by financial sector companies. Given the pervasive role of the financial sector in state capture and corporate fraud, South Africa needs a regulator that will stand up for and serve the public as well as regulate corporations without fear or favour. If it does not do so openly and transparently, as it is legally obliged to, there is no way of knowing what it is doing and whether it is acting in the public interest.

Since 2018, Open Secrets and the UBC have sought to avoid legal action by trying to engage with the FSCA and fund administrators. We published an investigative report –The Bottom Line: Who Profits from Unpaid Pensions? – in 2019, in order to find out what is being done to remedy the situation. We have also written many letters, to which the FSCA has responded by essentially saying that it is engaging in behind closed doors discussions with private fund administrators.

In its last letter to us, the FSCA baldly stated that it is not required to be transparent, as it “is accountable to Parliament and the National Treasury”, in addition to being “accountable before the Judiciary”. While we understand that legislatively, the FSCA is accountable to Parliament and the National Treasury, we strongly maintain that it must be transparent and accountable to the public it serves. Like many others before us, we had hoped there would be no need to approach a court to ensure regulatory and oversight bodies carry out the most democratic of duties.

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While few immediately associate youth issues with pensions, the reality is that many young people actively participate in and even depend on the pensions industry. This includes their participation in the ongoing struggle of millions to access more than R42-billion in pension benefits owed to individuals and families.

Young people interact with the pensions industry in various ways. Some in formal employment already contribute to a pension or benefit fund or are considering which fund to choose. Those counted among South Africa’s spiralling youth unemployment figures (now at 53.18%) might never have considered a pension, but they will surely need it if they are to escape poverty. Then there are the many children being raised by their grandparents whose only source of income is their pension. 

But there is another group. The young people who are actively trying to secure the unpaid pension benefits of parents, grandparents or relatives who have been failed by the pensions industry. Whichever way you slice it, pensions are an intergenerational issue, making the misdeeds of the pensions industry as much a youth justice issue as they are a geriatric one.

In November 2019, Open Secrets released its investigative report The Bottom Line: Who Profits from Unpaid Pensions? The investigation catalogues the cancellation of over 6,000 pension funds in both flawed and unlawful ways. Hundreds of these funds had still not paid out their members. The Bottom Line implicates private fund administrators and the regulator – the Financial Sector Conduct Authority (FSCA) – in failing to fulfil their legal duties during the cancellations scheme and avoiding accountability in the fall-out.

Beyond the cancellations scheme, there are billions in unpaid benefits that remain in active funds. These include dedicated ‘unclaimed benefits funds’ set up by fund administrators to preserve the benefits until their beneficiaries are found and paid. Fund administrators and asset managers continue to earn fees from these assets. Yet administrators, fund trustees and the regulator – despite having significant resources – have not done enough to ensure that these funds are paid out.

The Bottom Line was accompanied by a booklet, Look Beyond the Bottom Line, which tells the stories of pensioners and other beneficiaries from the Unpaid Benefits Campaign and the Cape Town Ex-Mineworkers Forum. Their stories highlight how an unscrupulous industry – including former employers, fund trustees and fund administrators – has dragged them from pillar to post with little consideration for their plight. 

Many of the people we spoke to live in dire poverty. They explained how receiving their benefits would allow them to fix their homes, feed their families and retire with dignity. Many of them were grandparents and the primary caretakers of grandchildren who they support on the measly state pension. During the interviews, some of these children played outside or sat next to their grandparents as they relayed their stories.

Read more here

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16 June 2020 | Mamello Mosiana |

While few immediately associate youth issues with pensions, the reality is that many young people both actively participate in, and depend on, the pensions industry. This includes their participation in the ongoing struggle of millions to access over R42 billion in pension benefits owed to individuals and families, but that remain unpaid. Paying this money is a matter of justice not just for pensioners, but for young people too.

Young people interact with the pensions industry in various ways. Some in formal employment already contribute to a pension or benefit fund or are considering which fund to choose. Those counted in South Africa’s increasingly high youth unemployment (now at 53.18%) may not even have considered a pension, but will surely need if they are to escape poverty. Then there are the many grandchildren being raised by their grandparents whose only source of income is their pension.

But there is another group. The young people, who are actively seeking the unpaid pension benefits of parents, grandparents or relatives who have been failed by the pensions industry. Whichever way you slice it, pensions are an intergenerational issue, making the misdeeds of the pensions industry as much a youth justice issue as they a geriatric one.

In November 2019, Open Secrets released its investigative report The Bottom Line: Who Profits from Unpaid Pensions? The investigation catalogues the cancellation of over 6000 pension funds in both flawed and unlawful ways. Hundreds of these funds still had not paid out their members. The Bottom Line implicates private fund administrators and the regulator – the Financial Sector Conduct Authority (FSCA) – in failing to fulfill their legal duties during the cancellations scheme, and avoiding accountability in the fall-out.

Beyond the cancellations scheme, there are also billions in unpaid benefits that remain in active funds. These include dedicated ‘unclaimed benefits funds’ set up by fund administrators to preserve the benefits until their beneficiaries are found and paid. Fund administrators and asset managers continue to earn fees from these assets. Yet, administrators, fund trustees and the regulator – despite significant resources – have not done enough to ensure that these funds are paid.

The Bottom Line was accompanied by a booklet, Look Beyond the Bottom Line, which tells the stories of pensioners and other beneficiaries from the Unpaid Benefits Campaign and the Cape Town Ex-mineworkers Forum. Their stories highlight how an unscrupulous industry, including ex-employers, fund trustees and fund administrators, has dragged them from ‘pillar to post’ with little consideration for their plight. Many of the people we spoke to live in dire poverty and explained how receiving their benefits would allow them to fix their homes, feed their families and retire with dignity. Many of them were grandparents and the primary caretakers of grandchildren who they support on the measly state pension. During the interviews, some of these children played outside or sat next to their grandparents as they relayed their stories.

We also spoke to Tshidiso who at 36 was the youngest of our interviewees. Tshidiso, and his family are looking for the benefits owed from the 20 years that his grandmother, Anastasia, worked as a cleaner for the Telephone Manufacturers of South Africa (TEMSA). Unfortunately, Anastasia passed away in 2007 and it was only in 2012 when her family discovered that she may have been owed benefits.

Anastasia like many people then and now, did not have a clear understanding of the deductions on her pay-slip or the pensions industry in general. This is a systemic problem in how employers, pension funds and their administrators fail to communicate clearly to employees about their benefits and associated rights. Tshidiso’s family was only alerted to the issue of his grandmother’s potential benefits by talk of surplus payments for those who had worked at TEMSA in their neighbourhood of KwaThema. Surplus assets are the difference between what a fund owes its members and the market value of the assets it holds; it can, on occasion, be paid to the fund members in addition to their main benefit.

Tshidiso’s family went to enquire about this at MIBFA’s offices. They were told that his grandmother did not qualify because the surplus only became payable in 2008, a year after she passed away. Despite being heartbroken by the arbitrariness of this decision they have continued to look for Anastasia’s main pension benefits as they still qualify to receive it as her beneficiaries.

Tshidiso’s family is poor and unable to secure adequate health care for his disabled mother and aunt. Tshidiso was unable to finish his degree at the University of Johannesburg because his family did not have enough money to continue to pay for his fees. He has since struggled to find work.

Tshidiso’s story mirrors that of many young South Africans who are forced to drop out of university due to lack of finances and an ever expanding youth unemployment rate. Even with financial assistance, only 34% of financial aid students graduate from university. 

Moreover, many students are in debt to universities, collectively owing them millions of rands. The debt dates as far back as the 1980s. Many indebted students are refused access to their degrees or diplomas despite completing their education, leaving them unable to secure work to help them pay off the loans.

For Tshidiso, the financial barrier to his higher education degree could be eliminated by his family receiving his grandmother’s benefits. He would be able finish his final year at university, which he believes will aid him significantly in his job search. His family would also be better able to access essential care for Tshidiso’s mother and aunt.

Tshidiso’s story embodies the multi-layered and inter-generational effects of exclusionary systems. To look for his grandmother’s pensions, his family uses the photo of her receiving a long-time service award from TEMSA, and her ID document. They do not have her payslips or any other record of her employment. Just the framed photo. In the photo, Anastasia is shaking the hand of a white man at an awkward distance – a familiar symbol not of the COVID19 era but of the racial segregation of apartheid.

After months of listening to people relate the stories of the horrors of working in harsh conditions and for little pay during apartheid, the image of Anastasia receiving that certificate and listening to her family’s contemporary struggles brought home the magnitude of the impacts of racialised labour and the maladministration of the pensions industry.

When speaking to the ex-mineworkers, many of our interviewees revealed that they used their Blue Cards from the mines, or their passbooks, to prove their work record. Just like the passbook or dompas, the photo of Anastasia’s long-time “service” award is a symbol of the draconian and exploitative aspects of Apartheid. The fact that many Black people are forced to rely on these symbols to access their rights in post-Apartheid South Africa highlights the continued racialised socio-economic exclusion of Black people .

Poverty is cyclical in its nature. Poor people experience barriers to education and basic services, meaning that their children are unlikely to progress out of the social class they are born in. The payment of Anastasia’s benefits will not fix our deeply unequal society, but it would be the first step towards economic justice for Tshidiso and the rest of her family. It would help her grandson in his attempts to break the long generational chain of poverty and help him provide for his own son, who is dependent on two unemployed parents and the state child support grant.

It is thus incumbent on regulators and pension fund administrators to reinstate cancelled pension funds and work to trace the millions owed unpaid benefits, as well as build systems that are responsive to those trying to access their benefits. This includes families like Tshidiso’s. While many actors in the pensions industry are from the private sector they fulfil a social welfare role and profit from doing so. It is imperative they play their part in correcting years of profiteering off the misery of the poor, and are held accountable where they fail. There are millions whose lives and futures depend on it.

Please, look beyond the bottom line.

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Questionable appointments, or failure to appoint people, remain a blot on the finance minister’s copybook. It raises the question: has he lost interest?

Tito Mboweni is a politician wrapped in contradiction. He clearly thrives on the warm affirmation he elicits from his 778,000 Twitter followers. He knows how to accelerate controversy — praising the cleanliness of Rwanda’s streets, contradicting the ANC leadership, toying with dropping Lesotho’s borders.

Despite mastering the craft of the politician, he seems a reluctant leader. Recently, he described being a politician as a “poorly paying, thankless and abusive job”. If his modesty is to be believed, he was reluctant to accept the poisoned chalice of finance minister.

Though eminently qualified, he has made a string of poor decisions which raises the question: has he lost interest in the hard work of governance?

In three critical institutions, he has either signed off on questionable appointments or failed to appoint boards or leaders.

The Financial Sector Conduct Authority (FSCA)

The FSCA — SA’s first dedicated market conduct regulator — has had no stability at the helm for the past 26 months. Yet its job is crucial: it was conceived to ensure better corporate accountability and protect the public from unscrupulous corporations.

Mboweni has inexplicably failed to appoint a permanent commissioner. Abel Sithole, the former chair of the FSCA’s predecessor, the Financial Services Board (FSB), has been a caretaker commissioner for some time. But Sithole’s appointment last month to head the Public Investment Corp (PIC) surely means he can’t do both jobs.

Open Secrets wrote to Mboweni a year ago to ask the reasons for this delay.

Read more here

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You may be facing hardship but what if you’re owed money? Michael Marchant of Open Secrets of tells me there’s R43b in retirement funds owing to 5m beneficiaries & they don’t know about it. Find out how you can claim in this podcast.

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In the context of a strained fiscus and a dysfunctional social security agency – freeing up private assets that are owed to poor and vulnerable individuals could also go a long way to supporting the increase in social welfare grants. It is in this context that the roughly R43-billion owed to just under 5 million people, many of them grant beneficiaries, should be viewed.

The now-viral video of the Centurion food parcel queue that snaked 4km was a stunning and sobering visual reminder that the Covid-19 pandemic is devastating to millions of South Africans. The people in that queue represent a small portion of the millions of South Africans who do not have enough food and have lost income due to the closure of large parts of the formal and informal economies. 

As the state scrambles to find the money needed to address the unfolding crisis, it is a cruel irony that right now, over R40-billion in pension benefits languish in the accounts of corporate administrators and remain unpaid to millions of pensioners and pension fund members. 

The failure of pension fund trustees, fund administrators and the state regulator to ensure that beneficiaries are traced and paid has been well documented by Open Secrets and the Unpaid Benefit Campaign (UBC). The implication of this failure for vulnerable beneficiaries is made even starker by the current crisis. 

The reality is that food parcels, important as they are, are not sustainable economic relief. Long-term food security is one of many socio-economic concerns for South Africa. Moreover, the logistical problems with procurement and distribution as well as the evidence of corrupt councillors abusing the system and harming the most vulnerable make it clear that getting cash into people’s hands quickly is essential. 

The government’s decision to heed the advice of civil society and progressive economists to increase the child support grant by R500 per month was an important victory, though quickly undermined by the government’s indication that this increase will be per caregiver and not per child. Twelve civil society organisations have thus rightly urged the government to reconsider and ensure that the increase is per child, and to consider raising other welfare grants. 

Yet in the context of a strained fiscus and a dysfunctional social security agency – freeing up private assets that are owed to poor and vulnerable individuals could also go a long way to supporting the increase in social welfare grants. It is in this context that the roughly R43-billion owed to just under 5 million people, many of them grant beneficiaries, should be viewed. 

South Africans are not dependent on state pensions alone – consider that over 15 million people are members of over 5,000 privately administered pension funds. For many, like contract cleaners and private security guards, participation in a pension fund is made compulsory by a bargaining council agreement. This means that employed South Africans from all walks of life have a portion deducted from their salaries every month in the hope that their pension will support them and their families in their old age. Recent new data on extreme wealth inequality in South Africa reveals that pension assets are an important source of wealth for a remarkably wide range of people with different levels of income and wealth. 

The grave injustice, however, is that despite contributing a portion of their salary to a pension fund, often for many years, many people may not receive their pension when they retire, move jobs, or lose their jobs. The most recent data released by the Financial Sector Conduct Authority (FSCA) – the independent state-funded regulator responsible for regulating private pension funds – confirms that R43-billion (this R43-billion does not include unclaimed benefits in the separately regulated Government Employees Pension Fund), in so-called “unclaimed benefits” are owed to just under five million people. 

Read the full article here

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It is extraordinary to see how pension industry insiders leap to defend insurance behemoth Liberty Life for its scandalous handling of the unlawful cancellation of hundreds of pension funds.

A recent investigative report by Open Secrets, “The Bottom Line”, revealed how Liberty accounted for 80% of the funds cancelled in an unlawful and error-strewn “cancellations process” run by the then Financial Services Board (FSB) up to 2013. Our report distinguished between the broader R50bn problem of unpaid pension benefits, and the worrying case of the pension funds cancellation.

The first category, unpaid benefits, is complex. It is the result of various factors, many of which are historical — for instance, apartheid’s migrant labour system and the fact that many pensioners, some with limited financial literacy, didn’t know they were contributing to a fund.

Read more here

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