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Billions of unclaimed pension and life insurance benefits

By Staff Writer
Many pensioners in South Africa are struggling to make ends meet but shockingly R15 billion is sitting in unclaimed pension funds. Rosemary Hunter, the deputy executive officer for retirement funds, said that the Financial Services Board (FSB), which oversees more than 5,000 retirement funds, is putting pressure on the trustees of pension funds and stepping up joint efforts with the Treasury to find beneficiaries who have not claimed their money.
 
In addition, thousands of life insurance policy holders did not know they had unclaimed funds, said the Association for Savings and Investment South Africa (ASISA). However, unlike with the pension funds, the beneficiaries were tracked down and given their money.
 
“Life [insurance] companies managed to trace 182 366 policyholders and beneficiaries in the first six months of this year and unite them with unclaimed assets due to them as a result of benefit or maturity payments,” said Peter Dempsey, deputy chief executive officer of ASISA.
 
Unclaimed pension benefits
 
The 2012 annual report of the Registrar of Pension funds puts the unclaimed pension benefits figure at just over R 15 billion. There has not yet been a report released for the 2013 year, and so the more recent figures are not known.
 
The R15 billion figure is based on information derived from financial statements submitted to this office by retirement funds subject to regulation in terms of the Pension Funds Act, said Hunter. “Accordingly it excludes the Government Employees Pension Fund, the Telkom Pension Fund, the Post Office Retirement Fund and the three Transnet funds,” said Hunter.
 
However, despite the two year old figure, it still highlights that there is a problem with unclaimed benefits, and that funds are not doing all they can to find the beneficiaries.
 
“Funds should insist that employers supply them with up to date contact information in regard to their employees who are members of those funds including identity numbers, cell phone numbers and so on so that, when a member becomes entitled to a benefit, the fund can make contact with him or her and get any further information it needs in order to pay the benefit to him or her,” said Hunter.
 
Hunter said that the FSB is deeply concerned about the increasingly high number of unclaimed benefits and want to find ways to help funds trace and pay their beneficiaries, both local and foreign as well as encourage funds to do more to trace and pay the beneficiaries.
 
“We also consider that, as the contributions made to a retirement fund for the benefit of an employee are part of that employee’s pay, an employer has a duty to assist the employee to claim from his or her fund the benefit to which the member has become entitled as a result of membership of the fund and the contributions paid to it. Employers should not simply leave their employees whose employment has terminated to ‘fend for themselves’ in claiming their benefits,” said Hunter.
 
Hunter also added that some funds seem to think that that they can sit back and wait for claims whereas, as the purpose of a pension fund is to pay benefits, they must take all reasonable steps to trace and pay the beneficiaries.
 
Number of life beneficiaries found
 
The life insurance industry has shown that it is possible to trace beneficiaries. Thousands of the life insurance policyholders were traced within six months of their policies becoming payable. “Of the 182 366 people traced, 76 151 were traced within six months of benefits becoming payable to them, 37 772 were traced within three years and 68 443 were traced within 10 years,” said Dempsey.
 
Dempsey highlighted that reports received from member companies show that at least four different tracing initiatives were used. Such tracing initiatives were: tracing agencies, private investigators, the Department of Home Affairs and credit bureaus, and the internet. “We have also seen a number of insurers apply innovative tracing methods using social media. The most successful searches have been via Facebook,” said Dempsey.
 
However, Dempsey said that there were still 349 536 policy holders and beneficiaries who must still be traced.
 
The new standard requires that ASISA members intensify the level of tracing policyholders or beneficiaries in order to minimise the pool of assets that remains unclaimed. This commitment by life insurers to find policyholders is due to the life insurance industry’s commitment to treating customers fairly, said Dempsey.
 
Dempsey went on to say that South African life insurers who are ASISA members have committed to holding and growing unclaimed policy benefits until the rightful owner is found, no matter how long it takes.
 
“Liberty has embarked on a project to trace unclaimed benefit policyholders and has engaged with a third party contractor, Sharepartner, who assists Liberty to re-establish contact with policyholders and beneficiaries for liberty to pay out unclaimed funds,” said Liberty in a statement.
 
How to find out of you are a benefactor
 
If you are unsure whether or not you have unclaimed policies, you can register on unclaimedbenefits.co.za for free. This site is a division of the Data Factory, and uses the “power of the internet” to search for policyholders.
 
Furthermore, you can also check on the Financial Services Board website where you can search for a specific unclaimed benefit or do a partial search using either the fund name or your surname.
 
If you have an old policy or unit trust investment with a company that no longer exists, you can contact ASISA on (021) 673 1620 to find out what happened to the company and who controls your investment.
 
If you believe that you have unclaimed benefits from Liberty, email them on ub@liberty.co.za with your full names, identity number and contact details.
 
For more information on the ASISA standard to unclaimed assets, click here.

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