THE distribution of the estimated R60bn-R80bn in surpluses and unclaimed benefits that pension funds are compelled to apportion equitably between members, pensioners, former members and employers who contributed to the funds, appears to have stalled. Not only did about 70% of pension funds fail to submit their surplus apportionment scheme plans to the Financial Services Board (FSB) in time for the April 1 deadline, but the board does not appear to have succeeded in effectively monitoring the process or motivating general compliance by the funds.
Consequently, the payout of this money is being severely retarded and the estimated 3-million to 5-million South Africans who stand to benefit from the process will have to wait even longer to get their slice of the wealth. The situation is no doubt being aggravated where former members have simply not been traced and communicated with.
Benefit Recovery Services (BRS) believes the FSB — as the statutory body appointed to regulate the life offices, retirement funds and pension funds — should be flexing its legislated muscle as a way of driving the process. Simple compliance with a submission deadline misses the objective of the legislation, which seeks to ensure that where pension fund surpluses are available and due, they are distributed.
The FSB must demonstrate not only its commitment to this process, but also ensure that sufficient steps have been taken to trace and communicate with eligible beneficiaries. The FSB should be monitoring and reporting on the amount of surplus monies available for distribution and how many South African families are eligible to benefit. Further compliance and monitoring should measure how much of these funds are paid out and reach the rightful beneficiaries. The FSB should take a much stronger stance by:
‖Providing guidelines to ensure all adequate steps are taken to ensure former members are contacted and communicated with;
‖Providing targets for the implementation of surplus apportionment scheme plans, that can be measured and therefore monitored;
‖Measuring and reporting on the actual distribution of the surplus monies and how many fund members have benefited;
‖Penalising bodies and organisations that persistently fail to comply without justifiable reason; and
‖ Providing assistance to the bodies and organisations it regulates.
The FSB must highlight the ineffectiveness of communicating with former members by advertising alone. This has proved ineffective for the industry and allows funds to meet minimum compliance without any real effort to trace and communicate with their former members. The standard “notice” type of advertising which appeared regularly in weekend national newspapers seems to have been designed to ensure limited response. Proactive tracing and communication is the only viable route.
The FSB’s proposed national fund — to which all unclaimed benefits identified in terms of the surplus apportionment scheme plans will be transferred if the beneficiaries remain untraced after 24 months — should be a last resort. Not only will such action defer the funds trustees’ fiduciary responsibility to locate the rightful beneficiaries and pay them their dues, but also the probability of beneficiaries receiving the benefits may become even more remote; which ultimately means that the purpose of the Pension Funds Second Amendment Act will be defeated.
‖Mabuza is head of sales and marketing at BRS. |
