26 Oct You May Have Unclaimed Benefits and Rand Rescue Can Find Them

You May Have Unclaimed Benefits, and Rand Rescue Can Find Them

With so many people struggling to make ends meet and the unemployment rate shooting through the roof, it’s hard to believe that there’s nearly R45-billion in benefits just waiting to be claimed.

Why are so many South Africans barred from accessing their well-earned funds, and why are so few people aware of this?

Rand Rescue breaks it down.

7,59% of South Africans can claim

In the past five years, the regulator has already allocated approximately R20-billion in previously unclaimed benefits, which were divided between 500 000 South Africans. Despite their efforts to track and allocate funds, however, they have not managed to reach the additional 4,5-million South Africans who have unclaimed benefits. 4,5 million, of course, is nearly  8% of South Africa’s population. Although some of these benefits are due to migratory workers, the bulk of these funds are still waiting for SA claimants.

Even more surprising – the R45-billion estimation is for all unclaimed benefits as of December 2019. The Financial Sector Conduct Authority (FCSA) is still waiting for new numbers which will include unclaimed benefits for 2020, while 2021’s numbers will most probably only be available from 2022 onward.

Given the difficulty in tracing rightful beneficiaries, the FCSA estimates that approximately 40% of beneficiaries will never receive their funds.

This estimation is based on:

 – manpower available to track beneficiaries

 – time available for tracking beneficiaries

 – cost of tracking beneficiaries

 – quantity of information available for tracking beneficiaries

 – quality of information captured for beneficiaries

 – frequency of financial services sector restructure

 – accessibility to beneficiaries based on available information

 – regulatory difficulties regarding encashment and/or transfer of funds, both within SA and across borders

 – regulatory difficulties regarding encashment and/or transfer of funds under deceased estates

Why so many unclaimed benefits?

There are numerous reasons why benefits go unclaimed. Some of these include poor business administration, incorrectly captured details, high employee turnover rates and a lack of financial literacy skills.

Many South Africans don’t have the financial savvy to understand how retirement funds work, and don’t know how to access fund administrators when they leave their place of employment.

The matter is further compounded with many employment funds being administered by third parties – something employees are not always aware of and which is poorly communicated by employers. This third party administration means that many employee funds are slapped with novel names which don’t necessarily reflect the actual investment products as they are categorised and labelled with the administrators.

When employees approach fund administrators or past employers later on, the scheme names as reflected on their payslips or statements may not be traceable or recognised. This holds true especially where the employee’s details were incorrectly captured, where their details have changed, or where savings have been transferred to preservation or other funds.

While employers have an ethical responsibility to educate their employees on their retirement savings, many employees are also not aware of where their investments are kept and by whom, let alone the type of products they hold. Many South Africans view retirement savings as equal – with little understanding of the difference between pension funds, preservation funds, provident funds pension preservation funds and retirement annuities. Add life and living annuities, estates, taxes, insurance, shares and assets to this and matters become even more confusing.

Expecting each individual to have a proper grasp of all the intricacies of financial services and what they are not only obliged to do but what is due to them is simply illogical. It’s understandable that so many people struggle to access money which they’d legally acquired and accrued.

Living and working across borders

Many South African expats or foreigners who have worked on SA soil simply don’t have the time and capacity to manage retirement or other policies within SA borders. This often comes down to time – whether time at their disposal for administration, or the literal expiry dates on their visas. And it’s no secret that dealing with South African authorities remotely can be a nightmare of note.

With new rules for the transfer or retirement monies from SA in place, South Africans returning to SA are also limited in the amount of time they can spend on their home soil, since prolonged stays could have SARS view them as South African residents which could restart the clock on the 3-year waiting period necessary to be deemed fully-fledged expats and unlock their retirement savings.

A game of musical chairs

Another crucial problem is the rapid change of administrative processes, data-keeping and processing as well as financial sector restructure in South Africa.

The sector sees far more frequent business restructure, mergers and acquisitions than many other industries, which not only requires accurate transfer and processing of data, but also sees frequent discontinuation and changeover of funds. While many employers stick to certain financial service providers with regards to the administration of investments and insurance, there is also the tendency to switch to new administrators, creating additional margin for error – especially for past employees.

Mergers and novel partnerships are also prone to ‘split’ financial services offered to employers, whether due to new or renegotiated service level agreements (SLAs) or where businesses don’t hold the necessary financial services licences to administer divergent products. Some business entities cannot take over or administer all required financial products for an employer and their employees due to licensing or resource restrictions and need to either rely on partnerships or other businesses under umbrella holdings to manage different products – whether investments, medical aid, insurance, credit or banking.

While one would like to hope that such handover, mergers and partnership are smooth sailing, many things fall through the cracks – whether due to human error or digital error.  With frequent business and sectoral change, the administrative processes which govern the capturing, transfer, storing, analysis and recall of data and information are often archaic, outdated or incompatible. Feeding old data into a new system, or merging different data warehouses isn’t always a smooth process and the resources required to collate information from different sources is not always readily available. Orphan data (such information which is incomplete or improperly captured), is often left on the sidelines.

Confusing and conflicting rules

While retirement savings are regulated and different funds ascribe to different rules with regards to encashment, risk, transfer and taxation, details around such rules are often quite complex and most South Africans aren’t equipped with the financial and legislative knowledge to administer these matters on their own.

Internal regulation as applied by individual funds can be even more confusing, as many funds prefer the use of intermediaries or financial advisers to liaise with clients and act as go-between. This precedent often prevents individuals from accessing information around their investment or insurance products. In some instances individuals rarely or never receive any statements or breakdown of their investments and benefits.

Until recently many individuals had to approach individual funds and holdings to determine whether they are or have been clients of these companies.

Given these complexities, the regulator has made a conscious effort to find beneficiaries of orphan funds or unclaimed policies. As with the use of intermediaries in the financial sector, however, the FCSA had relied heavily on administrators to track and trace beneficiaries.

They’ve amended their strategy over time, however, and are now urging South Africans (and those formerly employed by South African companies), to approach the FCSA or use tracing agents to determine whether they may have unclaimed benefits and no longer wait for administrators to action such traces from their side.

Let Rand Rescue track your benefits

If you think that you may have money due to you, let Rand Rescue help you out.

Not only do we have the necessary experience and accreditation to track and trace your policies and benefits, but we have intricate knowledge of regulations, legislation and taxation applicable to your benefits.

We know where to look, what to ask and how to action fund transfer and are authorised to deal with fund administrators, insurers, banks, SARS and the SARB on your behalf.

Are you a South African living abroad or foreigner who previously worked in SA? No problem, we specialise in cross border finance and will see to it that funds due to you are transferred to your new home.

Who knows? You may just have a nest egg waiting for you!

Simply leave your details and we’ll get back to you.

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