‘Advertising by pension funds has a 8% to 10% success rate’
April 1 was the deadline for pension fund trustees to have submitted their surplus apportionment plans before penalties were imposed. And as there’s a three – month consultation period, any trustees who haven’t already submitted their plans have missed the deadline.
Colin Bullen, head of specialised consulting at Lekana Employee Benefit Solutions, estimates that by that date only about 50% had done. “Penalties will be applied from that date, though these haven’t been spelled out.”
One of the biggest tragedies in the country where so few people have adequate retirement provision is that R30bn to R40bn in benefits lies unpaid, according to the Financial Services Board (FSB). A national fund for unclaimed benefits to house the R30bn to R40bn is one reform that won’t wait until a new Pension Fund Bill is published in 2007, as the FSB has called for faster action.
Sandile Mabuza, Head of Sales & Marketing at Benefit Recovery Services (BRS), which specialises in tracing beneficiaries of retirement fund payouts, says the problem has been worsening over the past five years and is likely to worsen. “The estimate of R40bn mentioned by Dube Tshidi (FSB deputy executive officer responsible for retirement funds) presumably doesn’t even include any unclaimed benefits that will undoubtedly arise from hundreds of surplus apportionment schemes where former members have simply not been traced.”
A fund has to have conducted an actuarial evaluation and determined that there’s a surplus – then members have to apply for it. Many of those claims can go back to January 1980, so individuals have to check where they worked since that date and verify whether or not they’re owed anything form each.
The FSB proposed the creation of a national unclaimed benefits fund when a benefit is going to be transferred to if untraced after 24 months. While many observers (including labour and community) say that should be seen as a last resort, Tshidi says planning for the fund is proceeding. He says the success rate of funds tracing beneficiaries is less than 20%. Mabuza says the debt collection industry’s success rate is closer to around 80%.
He attributes the difference to the trustees’ reliance on advertising for members to come forward and claim their unclaimed benefits. “Couched in excessive legalese they’re neither eye catching nor easy to understand. Advertising by pension funds has an 8% to 10% success rate,” Mabuza says.
Another source of unclaimed benefits comes from the length of time it takes for pension funds to pay out benefits. Often people have moved on to different jobs and residences and company has lost tract of them during the six months it can take to pay out a member’s benefit.
Says Mabuza: “Even where people are aware money is due they don’t know how to claim it. Consequently, pension funds are increasingly using the services of agencies such as BRS, which provides a specialised communication and tracing service for unclaimed benefits.” The problem is that there are several such agencies and no central registry – hence the need for a national fund. He added that it is the trustees’ fiduciary responsibility to locate the rightful beneficiaries and pay them out.
Anyone can register at http://www.mycash.co.za to see if they’ve any unclaimed pensions, benefits, dormant bank accounts and the like. It’s free and the company sees if there’s anything owing – it only takes two minutes.
Eamonn Ryan |
