Picture: iStock
If the unclaimed pension benefits of R43 billion payout, it could alleviate poverty and support economic growth. Therefore, more should be done to make it easier for beneficiaries to know if they are owed benefits and claim them.
The Financial Sector Conduct Authority (FSCA) said recently that annual financial statements for the year ending 2019 submitted by retirement funds place the value of unclaimed benefits at R43 billion, with approximately 4.8 million unclaimed members.
Professor Jannie Rossouw form the Wits Business School says finding the members or beneficiaries will make a significant difference when they are paid out. The best option will be to save the money paid out, but the payouts can also put food on the table for poor families.
“Should this money be paid out and the beneficiaries spend it, it will make a substantial difference in the economy. However, what worries me is what happens to the funds once a member or beneficiary dies? With so many excess deaths due to Covid, how will the members or beneficiaries be found?”
Rossouw says more can be done to ensure people know where to look through a straightforward process to ensure that the money is paid out.
ALSO READ: What the pension funds’ legal victory means
NPO Open Secrets said, in reaction to the FSCA statement, that two years after it published its investigation into unpaid pensions, The Bottom Line-Who Profits from Unpaid Pensions, there is still R44.9 billion of unpaid pensions owed to South Africans.
In its report, Open Secrets said the high number of unclaimed pensions represented a fundamental failure by state regulators and pension fund administrators, which has serious socio-economic consequences.
The organisation says It is immoral that poor and vulnerable people should have money deducted from their wages for decades and then not receive their pension when they retire, move or lose their jobs.
“It is also unacceptable that large corporations profit from the system that is failing to protect these people.
“The harsh reality is that many South Africans endure a life of inequitable and insufficient access to resources and services and retire with little to show for years of hard work. There are multiple and structural reasons for poverty, but one way to improve older people’s constitutional rights to dignity and social security is through an adequate pension.”
According to Open Secrets 44% of South Africans older than 65 live in poverty.
“The issue of pensions in South Africa is primarily about dignity and giving substance to the right to dignity that is enshrined in the Constitution. The individual stories of pensioners and their long struggles to access benefits illuminate the dire human consequences of unpaid benefits.
“As is true for many poor South Africans, they have been used, abused and discarded by corporate employers. In the past, this was done with the direct assistance of the apartheid regime. Now many also feel abandoned by the democratic government,” Open Secrets concluded its report.
ALSO READ: ‘Struggling, not broke’ ANC stiffs employees’ families on death payouts
The FSCA says retirement funds hold and manager the unclaimed benefits and are also responsible for tracing and paying these benefits. The FSCA assists members or beneficiaries to trace unclaimed benefits by consulting with the fund or the fund administrators.
An unclaimed benefit is a benefit due to a member of a retirement fund in terms of the rules of the fund that is not claimed within 24 months. These benefits include:
ALSO READ: Early access to pension funds unwise
The reason for unclaimed benefits is usually inaccurate member data when fund members fail to update their contact details or employers do not provide comprehensive details of members to funds or administrators. Many employers or funds also do not give members enough information to inform them that they can withdraw benefits.
Another barrier is insufficient mechanisms to enable workers coming from other countries and leaving South Africa shortly after the expiry of their work permits to claim their benefits from their home countries and get paid in there. Poor administration and record keeping is also a problem.
According to the FSCA, annual financial statements submitted from 2010 to 2019, show that R34.3 billion of unclaimed benefits were paid to 1.2 million members. Over the past five years, R22 billion was paid to 598,000 members, amounting to an average benefit of R 36,978 per member.
The FSCA offers a service where you can check if you are owed unpaid pension benefits here.
Download our app and read this and other great stories on the move. Available for Android and iOS.