Frustration and tragedy haunts legacy of untraceable workers’ wasted benefits
Just three hours before the Constitutional Court ruled against activist Rosemary Hunter, saying that the Financial Sector Conduct Authority (FSCA) was not obliged to do more investigation on the controversial funds cancellation project, Mapaseka Mabe reached out to the media to try to find her late father’s provident fund benefits.
"Hello, please I’m asking you to help me check my father’s provident fund. He is an ex-mine worker," Mabe wrote to Business Day on Thursday morning. The 27-year-old Free State-born woman said she has been trying to find her father’s provident fund benefits since 2013. Her father, who worked in two mines between 1987 and 1996, contributed R43.21 of his meagre R966 salary to a provident fund in 1995, his payslip shows. He died in 2016.
"But we never got anything since he stopped working in 1996. He died without getting anything," said Mabe.
Mabe is among millions of beneficiaries who are struggling to lay their hands on their family members’ work benefits.
While it is not clear what happened to her father’s benefits, in most cases funds beneficiaries are struggling to claim have been moved to unclaimed benefits funds. The FSCA reported in September 2017 that there was more than R42bn in unclaimed benefits in SA and that about 4 million beneficiaries were affected. The benefits are administered by several private and public funds, and not the FSCA. But the watchdog said it had been assisting people who didn’t know how to claim.
Treasury’s deputy director-general, Ismail Momoniat, says companies that administer unclaimed benefit funds are the ones responsible for finding the right beneficiaries. Treasury and the FSCA have been pushing to get the funds allocated.
"Those [unclaimed] funds are still with the companies that administered the cancelled funds. We can’t interfere in what they do with specific funds.
"But since [divisional executive of retirement funds, Olana] Makhubela’s been there, a lot of progress has been made," says Momoniat.
While he does not dispute the need to allocate unclaimed benefits to their owners, Momoniat says Hunter’s legal challenge unnecessarily held up Treasury’s attempts to push down costs in the retirement industry. By consolidating retirement funds to fewer but larger schemes, their economies of scale will hopefully reduce their administration cost significantly. "Forty percent of workers’ benefits is taken up by charges. If you don’t consolidate, you won’t bring down the charges."
In a statement sent on Monday, the Treasury said it was aiming to deregister genuinely inactive funds. In the FSCA case, some funds were cancelled with multimillion rand in assets and some even had active members. The Treasury said before proceeding with the consolidation, it will engage the FSCA to study the judgment in further detail as well as other key stakeholders to address concerns.
Fica [Financial Intelligence Centre Act] has made it easy to trace people in SA. I’d say about 60% of the people are traceable now. We trace about 6,000 to 10,000 beneficiaries a month. But obviously it depends on the data we are given. If we have an ID number or date of birth, the odds of tracing the beneficiary improve a lot
"Treasury believes that the majority and both minority judgments offer valuable insights and observations to inform improvements in the consolidation process," it said.
Desperation from beneficiaries has seen some fall prey to scams. In 2017 the FSCA warned the public about a company purporting to assist people to claim surplus benefits if they or their family members ever worked in the motor manufacturing industry.
ICTS Tracing Services is one of the legitimate tracking companies contracted by some of the administrators of unclaimed benefits funds. MD David Weil says there has been a concerted effort by most of the institutions involved to track beneficiaries, but tracking people using historical records can be a challenge. Workers’ names were misspelt; some had no ID numbers on file while there were instances where people were not registered by their own names at work.
"Fica [Financial Intelligence Centre Act] has made it easy to trace people in SA. I’d say about 60% of the people are traceable now. We trace about 6,000 to 10,000 beneficiaries a month. But obviously it depends on the data we are given. If we have an ID number or date of birth, the odds of tracing the beneficiary improve a lot."
Weil, however, says that tracing the beneficiary is only half the battle won. "The big challenge is in the rural areas. People don’t have an understanding of how to get the required information to us. Some don’t even bother. There’s a lot of mistrust because of the scam incidents. Sometimes the amount due to the beneficiary is too little they can’t be bothered to pay the tracing fees. There’s also the challenge of registering with Sars [SA Revenue Service]. Many of the beneficiaries have never had to register for tax in their lives."
Weil says beneficiaries outside of SA — mostly in Namibia, Lesotho, Botswana and Swaziland — are particularly difficult to trace.
Attempts to recover unclaimed benefits have led to the formation of a movement called the Unclaimed Benefits Campaign. Beneficiary Douglas Maila says many struggling people in the townships would be doing better in life if they got what was due to them.
"Around the township we’ve got children we call names like Nyaope. But those who didn’t pay death benefits to those poor kids and orphans created those nyaope kids," says Maila.
He says even if the FSCA did more probes into cancelled funds he has no confidence in that. "The FSCA is investigating itself. How can it expose itself?" says Maila.