THE FSCA’S UPDATE ON UNCLAIMED BENEFITS

By Takalani Lukhaimane - Manager: Retirement Funds
Conduct Supervision

The FSCA recently held a media roundtable to give an update on regulatory developments in the Retirement Funds environment. The Divisional Executive of Retirement Funds, Mr Olano Makhubela and his team proceeded to cover a myriad of topics such as the impact of Covid-19 on retirement funds; curatorships and statutory management; sustainable financing; fund governance enhancement and Directive 8; unclaimed benefits and the Central Unclaimed Benefits Fund. Of particular interest during the session was the update on unclaimed benefits.

An unclaimed benefit is a benefit that was due to a member from a retirement fund in terms of the rules of the fund, that is not claimed by the member or beneficiary within a period of 24-month from the date on which the benefit became legally due and payable to a member. Unclaimed benefits include benefits such as


  • Withdrawal benefit – as a result of termination of employment, retrenchment, or resignation.
  • Death benefit – where the beneficiaries were identified but did not claim their benefit
  • Surplus benefit – benefit that became payable as a result of a distribution of surplus in the fund to active and former members of the fund
  • Retirement benefit – as a result of retirement from the fund

Unclaimed Benefits have been a widespread issue in the South Africa retirement fund industry for some time now and the annual financial statements for the year ending 2019 submitted by retirement funds place the value at R43bn with approximately 4.8 million unclaimed members.

During the session we emphasised that the responsibility of tracing and paying unclaimed benefits remains with the board of the fund, especially since these benefits are held and managed by retirement funds and not by the FSCA. The role of the FSCA is largely to assist members or beneficiaries in tracing an unclaimed benefit by liaising with the fund or the fund administrators.

Factors contributing to unclaimed benefits, amongst others, include:

  • Inaccurate member data - Fund members do not provide the fund with updated contact details or employers do not provide funds or administrators with comprehensive details of members of the fund.
  • Many employers or funds don't provide members with sufficient fund information, informing them of entitlement to withdraw benefits.
  • Not enough mechanisms to enable workers coming from other countries and leaving South Africa shortly after the expiry of their work permits, to claim their benefits from their home countries and get paid in those countries.
  • Poor administration and record keeping by funds or administrators.




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