A collaborative effort to close the unclaimed benefit untraced case gap.
By Didintle Mokonoto, CFP®
The trustees of Unclaimed Benefits Funds have the difficult task of tracing members and/or their beneficiaries to pay money that is due to them, while also ensuring the retirement savings are secure and keeping up with inflation as per the Pension Fund Act’s requirements.
Statistics from the industry have shown that cases can remain untraced for years, even with the committed efforts made by the fund administrators and the FSCA to trace individuals who are owed retirement benefits. Contributing reasons for this are the lack of documentation containing data and personal information that can be used to identify the members, members not updating their contact details and beneficiary information, and lastly, members not informing their beneficiaries that there are benefits payable to them in the event of their death.
Retirement fund monies that are unpaid or unclaimed for at least two years after a member leaves a fund are defined in terms of the South African Pensions fund act as an unclaimed benefit and are then administered by an unclaimed benefit fund. This administration is done at a fee, which is significantly lower than the fees charged by active retirement funds but is still a fee that can be avoided if the member and/or beneficiaries are traced. So, the time taken to trace the member and/or beneficiary will lead to fees being deducted from the members' fund value which could result in a depleted retirement fund.
A collaborative industry effort could be a solution.
A collaboration between the Financial Services Industry and The Financial Services Exchange t/a Astute can, through its multiple data integration points, enable fund administrators to (within the ambit of the Protection of Personal Information Act (POPI)) determine their client’s death status and identify potential beneficiaries through their linage, saving them time and resources in their tracking and tracing efforts. This industry collaboration can further allow retirement funds and insurers to potentially trace individuals, by identifying institutions where existing active employee benefits, policies or bank accounts exist, giving the fund administrator an advantage in obtaining a contact point for their tracing efforts.
Once the Administrators have traced the members and/or beneficiaries and have assisted them to claim their benefit, there is an opportunity to, through the member’s consent, further assist them to find any other unclaimed benefits that might exist with other retirement funds and insurers by requesting the individuals Consolidated Client Portfolio report from Astute.
Financial Advisors and members have a role to play as well.
Financial Advisors also play a big role in helping to close the unclaimed benefit gap as they meet with their clients at least once a year to review their financial plan. This gap can be closed by making sure that:
- Their clients’ contact and identity details are correct and regularly updated.
- They have a record of their clients’ beneficiaries, nominees, and dependents with all their updated identity details and contact information.
- They have an updated single view of all their clients’ investments, policies, and retirement funds on record.
Individuals can proactively track their unclaimed benefits if they suspect that they could have funds that are due to them. This can be done by:
- Contacting their previous employer’s retirement fund administrator and insurance companies directly to confirm any unclaimed benefits.
- If they do not remember which company was administering their previous employers retirement fund they can go to the FSCA website https://www.fsca.co.za/Customers/Pages/Unclaimed-Benefits.aspx where the Registrar of Pension funds provides a central database to assist members of the public to ascertain through the search engine if there are any unclaimed benefits due to them.
It is the responsibility of the member to always keep his/her details updated; this will avoid unclaimed funds. For those members who may have not been able to do that, this industry collaboration might be the solution to closing these untraced cases and ensuring that the correct individuals are receiving the benefits that rightfully belong to them.