Ismail Momoniat calls for law on unclaimed pensions
Concern over estimates by FSB that at least R40bn remains due to former workers
Legislation is needed to compel pension fund administrators to increase efforts to trace beneficiaries and pay out billions of rand in unclaimed funds, Treasury deputy director-general Ismail Momoniat says.
The Financial Services Board (FSB) estimates more than R40bn in pension funds remains unclaimed. Health Minister Aaron Motsoaledi recently said billions of rand due to former mine workers remained unclaimed. Chamber of Mines CEO Roger Baxter put the figure at R3bn for the mining sector.
The pension money, which is due to former mine workers from SA and neighbouring countries, is not controlled by the government.
The unclaimed benefits, which include cash accumulated towards retirement and deaths, are held in investment vehicles and overseen by trustees, who use tracing companies to find beneficiaries, albeit sometimes reluctantly.
Momoniat, an FSB board member, said on Wednesday the concern about unclaimed funds was a regulatory issue.
A law was needed to provide guidelines, he said, and to compel trustees to find beneficiaries and pay out the money.
"We have asked the regulator [FSB] to deal with this issue," he said, "but there are also structural issues involved."
Alta Marais, head of research and policy at the FSB, said a lack of record-keeping, the weak provision of information to employees as well as poor tracing efforts were among the reasons that workers’ benefits remained unclaimed.
The FSB was the respondent in a 2016 high court case over its handling of dormant pension funds. The case was dismissed, but there is an investigation into the way the FSB cancelled dormant pension funds.
Data in the FSB’s possession showed unclaimed benefits amounted to about R41.7bn. Of this amount, about R7.6bn was held by unclaimed benefit funds and the balance was in the relevant funds in which the benefits accrued or other funds to which such benefits have been transferred. The FSB’s retirement funds division had been participating in outreach initiatives to assist the public in lodging inquiries about unclaimed benefits, Marais said.
The regulator’s pensions registrar had obtained unclaimed benefit data from funds and administrators to enable it to provide a search engine on its website that will enable the public to search whether benefits are due to them and to provide contact details of funds.
Thami Mtetwa, director at Symphony Tracing Services, said companies were often reluctant to appoint tracing agents as they earned interest on unclaimed funds. Another issue, Mtetwa said, was the question of which party should pay tracing agents.
"Should the company pay or should the person who has unclaimed entitlements due pay?" Mtetwa asked.
Rosemary Hunter, the former deputy pension funds registrar who took the FSB to court, said while there were challenges in tracing former mine workers, working with the government was critical in ensuring the speedy recovery and distribution of funds to beneficiaries.