FSB Press Release 20 August 2015

Transcription

1 Retirement funds must take all reasnable steps t trace and pay millins f their members and beneficiaries wh remain untraced, the Deputy Registrar f Pensin Funds, Rsemary Hunter said n Wednesday. Addressing the media at the FSB, Hunter reminded pensin funds that their primary purpse is t pay benefits t their members and they must therefre find ways t trace and pay these beneficiaries, bth lcal and freign. It is estimated that at least 3.5-millin peple are wed abut R20-billin in benefits that remain unclaimed. A recent review in the mining industry alne estimated that at least R5.2- billin is wed t Funds shuld insist that emplyers supply them with up-t-date cntact infrmatin, including ID numbers, cell phne numbers, etc. The funds must cnsider the use f scial media as a means fr advertising unclaimed benefits r fr tracing beneficiaries, said Hunter. Hunter als warned the ptential beneficiaries t be wary f intermediaries wh ffered t help them claim their benefits, ften charging an exrbitant fee, adding it is imprtant t establish if the intermediaries are authrised by the funds t perfrm this functin in which case it is the fund that must pay fr the service, nt the members. The FSB assists members r beneficiaries in trying t trace benefits r shares f allcated surpluses they believe t be due t them if prvided with relevant and sufficient infrmatin. The FSB des this by liaising with the funds and/r their administratr and des nt charge a fee fr this service. End Ntes t the editr Belw are sme f the pertinent questins relating t unclaimed benefits: What is the rle f the FSB in tracing these beneficiaries? The FSB makes enquiries with the relevant pensin fund and if a member has already cntacted the fund and a respnse has been given (i.e. the availability f unclaimed funds is cnfirmed r nt), then it wuld nt be wise fr the member t cntact the FSB this wuld be a duplicatin. The Registrar s ffice assists members r beneficiaries in tracing an unclaimed 1

2 benefit, surplus r benefit by liaising with the fund and/r administratr f the fund. It des nt charge a fee fr this service. The Registrar s ffice des nt maintain the recrds f individual members. It keeps recrds f cntact infrmatin fr retirement funds and therefre assists with facilitating yur enquiry with the relevant retirement fund r retirement fund administratr. If the frmer emplyer f an untraced member r beneficiary is still perating, funds r their agents shuld cntact it and ask fr its assistance in tracing that persn. They shuld als cnsider using scial media as a means f inviting members and beneficiaries t claim unclaimed benefits they think are due t them. What happens if the mney remains unclaimed? Prir t 2007, many retirement funds had prvisins in their rules that prvided that, if a benefit was unclaimed fr a perid f mre than three years, the member s right t the benefit wuld lapse. This was nt cnsistent with the Prescriptin Act which says that a claim nly prescribes three years after the date n which yu were aware f yur right t make the claim. In 2007, PF Circular N. 126 was issued by the registrar f retirement funds, which prvided guidelines n treatment n unclaimed benefits, intrduced a definitin f an unclaimed benefit and said funds with such rules must amend them in accrdance with the guidance in the circular befre 31 December Funds are nw required t retain their liabilities fr unclaimed benefits r, in certain circumstances, t transfer thse liabilities t special purpse unclaimed benefit funds. Mst administratrs derive mre incme frm the administratin f the business f a fund relating t cntributry members than that relating t unclaimed benefits. If, hwever, liabilities fr unclaimed benefits, and assets f equivalent value, are transferred t an unclaimed benefit fund ver which the administratr has effective cntrl, it may be able t ensure that financial services prviders related t it, such as asset managers, derive significant incme frm the prvisin f services t the unclaimed benefit fund prvided that that fund retains thse assets rather than dispses f them by tracing and paying thse entitled t the unclaimed benefits fr which the assets have been held by the fund. What are the steps that claimants shuld fllw t crrectly claim fr their retirement fund benefits? The first step wuld be t establish the retirement fund that they belnged t r, if he r she is claiming a share f the lump sum payable n the death f a deceased member, the fund that the deceased member belnged t. 2

3 The next step wuld be t cntact the retirement fund r its administratr t claim the benefit. Fr that purpse the claimant will need t prvide prf f identity and evidence f his r her membership f the fund r status as a frmer dependant f the deceased member at the time f his r her death. This evidence culd be in the frm f payslips, benefit statements, r crrespndence. If there is a benefit payable t the claimant, he r she will be asked t cmply with the prcedures set by the fund fr the prcessing f claims. Fr example, the claimant may need t cmplete a frm. and submit dcuments such as certified cpies f his r her identity dcument, bank statement and prf f address Members must fllw up the payment prcess with the fund r administratr. Why d 3.5 millin beneficiaries still remain untraced r unpaid? There are numerus reasns fr this, including- The failure by many emplyers and/r funds t prvide prper infrmatin t emplyees, such as infrming them f their entitlement t a withdrawal benefit if they resign, are dismissed r retrenched frm their emplyment and hw t claim a benefit when it accrues. Pr administratin by administratrs cupled with a failure by the bards f retirement funds t mnitr cmpliance by thse administratrs with their duties in terms f their agreements with the funds and t take timeus actin t minimise the prblems that resulted frm pr administrative practices when the bards became aware f them. The requirement that freign wrkers leave the cuntry shrtly after the expiry f their wrk permits and the lack f sufficient mechanisms t enable them t claim their benefits frm their hme cuntries and be paid in thse cuntries. The failure by many fund members t infrm their dependants that, if they die in service, there may be benefits payable by their funds t thse dependants. The failure by sme fund members and beneficiaries t claim their benefits (particularly thse f lw amunt). The failure by many bards f funds t take all reasnable steps t trace and pay thse entitled t the unclaimed benefits. The rules f sme funds; prvided fr cmpulsry preservatin f benefits n terminatin f emplyment befre retirement; r 3

4 prvided fr a waiting perid f six mnths t a year befre a member culd claim his r her benefit and then nly if he r she did nt becme emplyed by anther emplyer participating in the fund. Has this number been this high fr ver tw r three years r has it declined? Accrding t the annual reprts issued by the Registrar f Pensin Funds, the number f unclaimed beneficiaries were as fllws: 3,4 millin (2013); 3,3 millin (2012) and 2,9 millin (2011) which indicates that it has increased. It must als be nted that verall fund membership als increased ver the said perid as fllws: 13,4 millin (2013); 13,2 millin (2012) and 12 millin (2011) in terms f the annual reprts. Wh are the likely beneficiaries in terms f demgraphics and emplyment sectr? The Registrar des nt have specific demgraphics f unclaimed benefits such as incme categry, ethnicity r gender as this infrmatin is nt disclsed in the funds annual financial statements submitted t ur ffice. Frm ur interactin with the industry, we are aware that there is a large prprtin f unclaimed benefits relating t beneficiaries residing in neighburing cuntries but it is difficult t estimate the numbers. We recently cnducted a review f unclaimed benefits held by unclaimed benefit funds and fund that the average amunt f unclaimed benefits held by thse funds is apprximately R It has been reprted that there are unclaimed benefits with an aggregate amunt f apprximately R456m which have accrued in terms f the rules f the Gvernment Emplyees Pensin Fund and n dubt there are many mre fr which ther retirement funds nt subject t regulatin and supervisin in terms f the PFA are liable. These include the fllwing funds administered by the Gvernment Pensins Administratin Agency (GPAA) fr which cntact infrmatin may be fund n Gvernment Emplyees Pensin Fund Temprary Emplyees Pensin Fund Assciated Institutins Pensin Fund Assciated Institutins Prvident Fund Members f Statutry Bdies Pensin Scheme They als include the Telkm Pensin Fund, the Pst Office Retirement Fund, the Transprt Pensin Fund, the Transnet Retirement Fund and the Transnet Secnd Defined Benefit Pensin Fund. 4

5 Why shuld beneficiaries be cautius when trying t claim these funds thrugh intermediaries? Beneficiaries need t be cautius in dealing with intermediaries. While there are sme reputable tracing agencies that have been appinted by retirement funds t trace members and beneficiaries and t assist them t claim their unclaimed benefits, there are als a number f intermediaries wh ffer t assist members f the public t claim their benefits but charge cnsiderable amunts fr their services when thse persns culd claim their benefits fr free. It is imprtant fr beneficiaries t establish whether intermediaries wh cntact them are authrised by the funds t perfrm this functin. Typically, tracing is nt a cre functin r fcus f benefit administratrs and as such the administratrs may nt als have the resurces r expertise t perfrm this functin. As a result, there are specialised tracing agents whse sle fcus is t lcate beneficiaries. Hwever, it is the respnsibility f the bard f a fund t ensure that effrts r mechanisms are in place t trace beneficiaries. This wuld include cnsidering all pssible and cst effective mechanisms befre deciding t cntract a tracing agent r transfer the benefit t an unclaimed benefit fund. They must als exercise clse supervisin ver the cnduct f their tracing agents, particularly as thse agents are nt subject t regulatin and supervisin by the FSB unless they are authrised financial services prviders in terms f the Financial Advisry and Intermediary Services Act (FAIS). Althugh the registrar des nt bject t the representatin f members and beneficiaries by authrised financial services prviders r lawyers, we d want t help t prtect members and beneficiaries by spreading the message that they are entitled t submit their claims fr free and funds must assist them t d s withut charge. Likewise, if we are needed t help put members and beneficiaries in tuch with the right peple representing the funds cncerned, we will happily d s withut charge. What measures are in place t ensure agents d nt explit claimants f benefits? If an individual intends t act as the agent f the member/ frmer member/beneficiary, such an individual must prvide prf in the frm f an affidavit signed by this persn in which it is cnfirmed that the member/frmer member/ beneficiary has been infrmed that 5

6 (a) He r she is entitled t (i) cntact the fund r its administratr r, if he r she cannt d s, the FSB, directly and withut charge; (j) He r she is entitled t claim the benefit t which he r she is entitled withut charge, But nnetheless wants t the assistance f the intermediary and is willing t pay fr that assistance n terms specified in the affidavit; and (b) He r she has been given prf that the intermediary is an authrised financial services prvider in terms f FAIS r a practicing attrney and a member f a Law Sciety with statutry disciplinary pwers ver him r her; and (c) He r she has been given the cntact details f (i) The FSB s call centre; and (j) the FAIS Ombud r Law Sciety t which he r she can refer cmplaints abut the cnduct f the intermediary if necessary. Enquiries: -Ends- Ms Tembisa Marele Cmmunicatins Specialist Financial Services Bard address: Tembisa.Marele@fsb.c.za Telephne: