Ruan Jooste | Daily Maverick | 7 November 2019 |
There is a mountain of money, R42bn to be exact, sitting in unclaimed benefit schemes out there, just sitting there, getting fatter, which means money for jam for the fund managers, but doesn’t afford any jam to the estimated four million people who own this stash of cash.
There are multiple reasons for there being an estimated total of R42-billion in benefits owed to more than four million pensioners and pension fund members, according to the Financial Services Conduct Authority (FSCA) 2018 Annual Report.
According to a report, “The Bottom Line, Who Profits From Unpaid Pensions?” released by advocacy group Open Secrets on Wednesday 30 October 2019, private fund administrators and the regulators have failed collectively to build transparent and accountable structures for the management of these funds.
“Instead, a system of perverse incentives flourishes,” it says. “Administrators derive considerable income and profit from fees related to managing assets.”
The FSCA concurs, saying in its annual report that if liabilities for unclaimed benefits, and assets of equivalent value, are transferred to an unclaimed benefit fund over which the administrator has effective control, it may be able to ensure that service providers related to it, such as asset managers, derive significant income from managing these funds.
It is also a case of these funds retaining those assets rather than disposing of them and making an effort to trace beneficiaries and make payment to them.
The disparity in perception about what is at stake here, the Open Secrets report states, is for each side. While R10,000 could be a life-changing windfall for a poor South African pensioner or dependant, it is a small change in the world of the private fund administrator.
“There are serious socio-economic consequences of depriving ordinary people of their retirement benefits, the report states.” Pensioners interviewed for the report include mine workers and factory workers.