Alexander Forbes feels fallout of ‘missing’ pension billions
When the Financial Services Board cancelled dormant retirement funds, it transferred beneficiaries’ money into ‘unclaimed benefit funds’. However, beneficiaries say it’s not unclaimed but unpaid
As Alexander Forbes accepted six boxes of documents from representatives of the Unpaid Benefits Campaign (UBC) last month, Douglas Maila shouted: "I have saved enough to retire peacefully. But now I will turn in my grave because I will die in poverty."
Maila is one of millions of beneficiaries — former retirement fund contributors or the dependants of deceased contributors — who have been struggling to get the money they saved for retirement through their working lives.
Between 2007 and 2013, the Financial Services Board (now the Financial Sector Conduct Authority, or FSCA) cancelled dormant retirement funds, transferring beneficiaries’ money — estimated by the FSCA to be R42bn and affecting 4-million beneficiaries — into "unclaimed benefit funds" administered by, among others, Alexander Forbes.
Maila and other members of the UBC dispute the "unclaimed" tag; they suggest these funds are simply "unpaid". So in mid-October, the campaign went to present the "untraceable" beneficiaries of "unclaimed" benefits to Alexander Forbes. The UBC gave the company 14 working days — a fortnight that ends tomorrow — to report on how far it has come in paying beneficiaries and reinstating cancelled funds.
The company promised to give a comprehensive report-back by tomorrow.
As the UBC and Alexander Forbes signed the memorandum, Maila said: "Please, people, change the way you are working. Bring our money before we die. I cannot rest in peace because you are holding my money."
And while ululations broke out when Alexander Forbes accepted the six boxes of claim forms and supporting documentation, not everyone shared the optimism.
After more than a decade of seeing such events take place, Bricks Mokolo, a paralegal at the Orange Farm Human Rights Advice Centre, remains sceptical. "These companies don’t give out the money in numbers. They pay one person, you get optimistic, and then they keep quiet for [a] long [time]."
Mokolo, a former member of the cancelled Cape Gate and Mittal Steel provident funds, says he has been doing this work for 17 years. "We’ve been trying to speak to these companies, reaching out to the media to say we are there. When they came up with this notion of ‘unclaimed benefits’, we said: ‘Who is not claiming?’ Because we’ve been looking for our money. How can they keep our money under unclaimed benefits? It means that they are blaming us, saying we are not claiming."
Mokolo says claimants are "sick and tired of presenting memorandums that get thrown in dustbins". He says workers have even had to do the legwork in tracing who administers their benefits. They found the codes for their funds, and sought advice from the human rights advice office about what documents would be required to complete their applications.
"So we’ve brought everything with us. We are here to help them to speed up the release of the money. But then they [administrators] use little techniques: they tell you that they want a letter of authority, knowing very well that some people don’t even have assets. The only assets they have is the money that is sitting with [the administrators]," Mokolo says, explaining the stumbling blocks claimants often face. He says the biggest concern is that the money is earning returns while sitting with administrators, but benefits due to workers are slowly being depleted by administration and other fees.
One of the country’s benefits administrators, Fairheads Benefit Services, says getting money returned to the rightful owners is a huge problem.
Fairheads administers some unclaimed benefit funds it took over from Sygnia.
David Hurford, director of consulting and marketing at Fairheads, says the administrators and investment managers tasked with finding "missing" members often have no incentive to do so. "In fact, because they charge fees based on a percentage of assets, there is a disincentive to finding the members and paying out their benefits," he says.
Hurford suggests that a centralised administrator, with no links to companies administering the funds, could be less conflicted. If it could provide the tracing service in a "retail sense", through government agencies or other proper commercial arrangements, it could reach more people than retirement fund administrators do, as they generally deal with members through their employers.
Until such matters are resolved, the waiting will continue for groups like the UBC. While its protest at Alexander Forbes was attended only by former workers from the Vaal region, it is trying to pool resources with other outfits — including KwaZulu-Natal shack-dwellers movement Abahlali baseMjondolo, for example — to ensure greater representation when it next demonstrates about unpaid benefits.