Speaker after speaker on the People’s Hearing on Unpaid Pensions on Constitution Hill in Johannesburg on Tuesday detailed their Kafkaesque efforts to put palms on unclaimed pension benefits collected over a long time of toil.
Just while you suppose you’re getting someplace together with your declare, a brand new administrator is appointed and the paperwork begins over again.
One speaker waited seven months to be instructed by the fund administrator that there was no pension for him.
Andrew Zwane, a member of the Unclaimed Benefits Committee (UPC), which is aiding pension beneficiaries to trace down unclaimed pensions, spoke about his frustration in monitoring down his pension benefits earned after a long time working for firms like African Cables, Fidelity Guards and XPS Services.
“I’ve lodged claims, but nothing has come to fruition. No one is coming forward to explain the way forward.”
While the years and a long time roll by, beneficiaries move on and depart the battle to say any benefits to their households.
Read: Over 20 000 former authorities workers haven’t claimed their pensions
Another speaker, Johannes Moloi (58) from Sharpeville, was a former SA Post Office employee earlier than components of his operation have been swallowed up by Telkom. He was retrenched in 2003 and given a payout of round R280 000, which included the pension fund he had been paying into for many years. None of this made any sense to him – then or now.
“I have three children to look after, and I got a retrenchment package of R50 000,” Moloi instructed Moneyweb. “I’m also here to fight for the unclaimed benefits of my father, who was an army chef before moving onto SA Rail [later part of Transnet]. He was paying R45 a month into his pension for decades, yet received nothing when he retired. He has passed on now. I think that money is sitting in one of these dormant pension funds, and the administrators are trying to steal it.”
Bruce Kapi of the UPC says hundreds of thousands of South Africans are going round in circles making an attempt to say benefits they’re legally entitled to, however regardless of assurances from the Financial Sector Conduct Authority (FSCA) that it’s doing all it may to trace down beneficiaries, the proof suggests not all directors share its enthusiasm.
That there’s an estimated R50 billion in unclaimed benefits isn’t in dispute, although UPC members say the determine is probably going a lot increased.
That’s the determine estimated by investigative and advocacy group Open Secrets, which has taken on the difficulty of unclaimed benefits as one among its campaigns.
Solving the riddle
How unclaimed benefits collected to a staggering R50 billion is a little extra opaque, and seems to be a uniquely South African riddle.
Poor company admin is partly in charge, however a far larger drawback was the variety of migrant employees travelling to the mines from Malawi, Mozambique, Lesotho and elsewhere.
Unable to pronounce or spell these employees’ names, directors gave them extra understandable names like John or Johannes, names that didn’t match no matter handed for IDs again in the Nineteen Fifties and Sixties. Personal circumstances pressured employees to return to their rural properties, typically forgetting that that they had unclaimed pension benefits.
Companies went bust, merged or went via periodic bouts of retrenchment. Pension fund administration handed from one firm to a different. There was a shift from outlined profit to outlined contribution funds, and an additional shift from standalone to umbrella funds.
One of the largest company scams, well-known to MBA college students, was the buyout of firms nearly solely to get their palms on employees’ pension funds.
The courts have been criticised for siding towards pensioners in two of probably the most outstanding instances of latest years: that of two pensioners towards the Tongaat Hulett Pension Fund; and that of former Financial Services Board (now FSCA) deputy pension fund registrar Rosemary Hunter towards the FSB over its makes an attempt to deregister funds that also had property owing to former workers.
Read: SA’s twisted historical past of pension fund plunder
The numbers
In 2021 the FSCA outlined the extent of the issue:
- There was R45 billion (now reckoned to be R50 billion) in unclaimed pension benefits;
- These benefits belong to 4.5 million South Africans;
- There have been 6 757 dormant pension funds in the so-called ‘cancellations’ venture initiated by the FSCA between 2007 and 2013 (almost a 3rd have been cancelled though that they had correctly constituted boards in place); and
- Dormant pension funds couldn’t pay out benefits, however might nonetheless earn charges for the directors.
More than 16 million South Africans belonged to a pension fund in 2019, with some 90% of members belonging to round 5 000 privately administered pension funds, sometimes run by the nation’s largest monetary establishments, in keeping with a examine by Open Secrets.
Some perception …
We have a good higher thought of the state of unclaimed benefits from the FSCA’s answering affidavit in a (now withdrawn) case by Open Secrets in which it asks the court docket to make sure the FSCA takes clear steps in the direction of remedying the illegal cancellation of pension funds.
The FSCA says it launched the cancellations venture in 2007 “due to the large number of dormant or orphan funds which undermined the integrity of the retirement funds register and the effectiveness of supervision”.
When she assumed the place as deputy head of pensions on the FSB, whistleblower Hunter raised issues concerning the method in which the cancellations venture was performed. She waged a multi-year marketing campaign throughout the FSB to power an open and clear investigation into the cancellation of hundreds of pension funds, a few of which nonetheless had property in them.
Hunter took her case all the best way to the Constitutional Court, however misplaced in 2017 on the grounds that the FSCA had already launched investigations into the cancelled pension funds.
Some enchancment
Hunter says there’s proof of improved administration on the FSCA, with Liberty named as one of many largest directors concerned in irregular cancellation of pension funds – exhibiting a lot improved ranges of transparency and efforts made to reconstitute cancelled funds.
“There’s also a new executive committee at the FSCA, and there appears to be a change in culture, and a greater willingness to address head-on the problem of unclaimed benefits,” provides Hunter.
Liberty says those that consider they’re entitled to unclaimed benefits can entry the Liberty Unclaimed Benefits service.
Another database is operated by BenX; a free search engine permitting anybody to test whether or not there are unclaimed benefits. It reckons greater than R85 billion is owed to greater than 5 million South Africans.
The FSCA additionally has an unclaimed benefits database search facility.
Read: How unclaimed retirement benefits might be put to higher use
Efforts should proceed
Open Secrets says it has withdrawn its litigation towards the FSCA in recognition of the truth that court docket challenges ought to be a final resort.
“We are nevertheless disappointed that the progress occurred alongside the continued absence of transparency and communication with the public, which we believe to be in violation of the constitutional duty of all state bodies to act transparently and in the broader public interest,” it says.
“Without such openness, unpaid beneficiaries and victims of the illegal cancellation of pension funds stay in the darkish.
“This is the only way that affected beneficiaries will know what is happening to their hard-earned pensions, and that the public can be assured that the FSCA is acting independently,” says Open Secrets.
“We will proceed to watch each the steps taken by the FSCA, and the compliance by the fund directors.
“We will likewise continue our approach of robust engagement with all relevant bodies, in the pursuit of broader social justice and in support of the interests of unpaid beneficiaries and victims of the unlawful cancellation of pension funds.”
Read: Could you be one among 7 000 individuals owed cash by the Guardian’s Fund?