Ciaran Ryan | Moneyweb | 26 November 2019
R19 billion owed to beneficiaries in metal industry
More than half the unclaimed benefits of R42 billion owed to roughly 4.2 million former workers are bottled up in just two trade union-affiliated pension schemes.
This is one of the findings in a recent report into unclaimed benefits entitled The Bottom Line by non-profit organisation Open Secrets. The amount of unclaimed benefits owed to former workers rises to more than R51 billion if funds falling outside the Pension Funds Act are added.
The fund with by far the largest amount of unclaimed benefits is the Metal Industries Benefit Fund with nearly R19 billion, followed by the Mineworkers Fund with R4.3 billion. These numbers are from a 2017 report on unclaimed benefits from the Financial Services Conduct Authority, or FSCA (formerly the Financial Services Board).
Administrators earn huge fees on these unclaimed benefits, which would disappear if the beneficiaries were to be located and paid out.
GroundUp asked for comment on the Open Secrets report from the regulator, the FSCA, and two administrators, Liberty and Alexander Forbes. Only Liberty responded.
Tiaan Kotze, managing executive of Liberty Corporate, said the problem of unclaimed benefits is decades old and not unique to South Africa. He said workers often left employment unaware that they have pension benefits owing to them. The administrators responsible for safekeeping fund members’ personal data often kept poor and incomplete records, he says. For example, many members were identified by their initials and surnames, rather than their full names. Nor, apparently, was there much effort to keep a record of forwarding addresses, which was a particular problem when workers went back to the rural areas or neighbouring countries. They simply disappeared off the radar, says Kotze.