Millions owed in unclaimed benefits

unclaimedAround R20 billion of pension fund assets remains unclaimed by an estimated 3.5 million pension fund members or their beneficiaries.

This is according to the Financial Services Board (FSB) which recently held a round-table discussion to address the issue of unclaimed benefits.

The aggregate amounts of these benefits have built up over time due to several different reasons: difficulties funds have experienced in identifying and contacting those entitled to benefits; difficulties members have experienced in claiming their benefits, particularly if they had to leave the area in which the fund’s offices are located, or leave the country altogether, immediately after their employment ended; statutory allocations of surpluses to former members with whom the funds had lost contact; and ignorance on the parts of members or the dependants of deceased members, regarding their rights to benefits.

According to Rosemary Hunter, the FSB’s deputy registrar of pension funds, the main challenge in finding members is poor fund records relating to benefits and out-of-date contact information.

Migrant workers who return to their home countries after leaving employment struggle to claim and receive payment of their benefits in those countries, which is possibly why the mining industry funds have one of the highest rates of unclaimed benefits in the industry with an estimated R5.2 billion owing to 200 000 members.

Hunter says many members are not aware that money is owed to them because before 2007, when the registrar instructed funds to change these rules, the rules of many funds provided that benefits that remained unclaimed three years after they had accrued would lapse.

Furthermore, in 2003 the Minister of Finance issued a regulation in terms of the Pension Funds Act which says that the full face value of each unclaimed share of surplus allocated to a former member in terms of a statutory surplus distribution scheme must be held in a special account unless and until it is paid. Furthermore, some individuals are not aware that, from the mid 2000s, even if they were fired from their jobs they still can claim their pension fund, as it is separate from their remuneration or work contract.

Beware of intermediaries

“People also believe that they need the services of a lawyer or intermediary to claim these benefits,” says Hunter, who adds that the FSB is concerned about unethical practices where intermediaries offer to locate unclaimed funds for a fee, sometimes up to 20% of the amount of the benefit received by the member. Some of these intermediaries simply send their client’s information to the Financial Services Board with a request that it find out if there are benefits due to them. This can be done by the member without incurring any costs.

There are also scams where intermediaries claim that they can obtain a death benefit from a fund even though the member is still alive. They charge the member a few hundred rand, then disappear.

Some funds have employed tracing agents and intermediaries to find members on their behalf, and to assist them to complete claim forms, but these intermediaries are paid by the fund, not the member.

How to find out if you have unclaimed funds

If you believe that you may be the beneficiary of unclaimed benefits, your first step is to contact your former employer , your pension fund or its administrator. If your employer no longer exists and you do not know the name of the pension fund then you can contact the Financial Services Board at pension.queries@fsb.co.za or alternatively FSB.PensionsUnclaimed@fsb.co.za. You can also contact 012 346 5915.

You will need to provide some form of proof of your employment, such as a payslip, indicating that you were a member of a fund in terms of your employment contract.. This can be a challenge if many years have passed and you do not have any paperwork. In this case the FSB may consider an affidavit where you stipulate detailed information about your employment.

Unfortunately there are many cases where people have fraudulently tried to claim from funds they did not belong to or where the fund had already paid the benefits. So the funds have to be careful and cannot simply assume that what you have said is true. Once the FSB has identified the fund to which you belonged, or its administrator, it will tell you how to contact its representative to submit your claim. Thereafter you will deal directly with that representative.

If a member wishes to use the services of a legitimate intermediary – if for example they do not have access to fax machines or photocopiers – an intermediary could assist with simply processing the claim. The fund may require an affidavit from the member confirming that they are aware that they could do the application themselves at no cost but that they are choosing to hire an intermediary. Some fund administrators refuse to deal with intermediaries due to the unethical behaviour experienced previously.

Government funds

The unclaimed benefit statistics reviewed by the Financial Services Board do not include government funds as these do not fall under the Pension Funds Act. These would include funds such as the Government Employees Pension Fund, The Telkom Pension Fund, the Post Office Retirement Fund and the three Transnet funds. These funds are not supervised by the Financial Services Board but it is estimated that the Government Employee Pension Fund has around R500 million in unclaimed benefits. If you were a member of one of the funds mentioned below, you can make contact with it through the Government Pensions Administration Agency (GPAA):

  • Government Employees Pension Fund
  • Temporary Employees Pension Fund
  • Associated Institutions Pension Fund
  • Associated Institutions Provident Fund
  • Members of Statutory Bodies Pension Scheme

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