Unclaimed pension benefits increase in SA
To over R47 billion
The FSCA's study showed that almost 80% of the unclaimed funds are with trade union-affiliated pension funds.
The Financial Sector Conduct Authority's (FSCA) attempts to reunite unclaimed retirement benefits with their rightful owners have only helped over 14 000 people to get R1.2 billion in payments.
The regulator published the Financial Sector Outlook Study on Tuesday, in which it also detailed progress made in finding people with unclaimed monies in pension funds and guardian funds.
The study showed that unclaimed retirement benefits increased to more than R47.3 billion at the end of 2021, rising from R42 billion previously reported for 2015 and 2018.
The FSCA's study showed that almost 80% of the unclaimed funds are with trade union-affiliated pension funds, and the majority of these unpaid members are low-income miners. There are 1 623 of these occupational retirement funds, and of the 4.8 million beneficiaries of unclaimed benefits in South Africa, 3.8 million should look for their monies there.
The second biggest area housing these funds is the unclaimed benefit funds. These are funds created by private sector investment houses specifically to keep money that has not been claimed for a long time. Beneficiary funds, which predominantly safeguard retirement benefits due to minor children, only have 0.2% of the unclaimed benefits to the value of R118 billion.
As the awareness of the billions sitting in unclaimed benefits grew, with the investment industry and the regulator taking flak from groups like the Unpaid Benefits Campaign, the FSCA implemented what it called the "Know-Your-Customer" directive.
The search engine implemented under that directive led to the payment of approximately R1.2 billion in benefits cited in the study.
The FSCA said while the National Treasury previously announced that it was looking at legislation that can consolidate unclaimed retirement benefits in one place, it continues to prioritise the fair treatment of beneficiaries and hopes to reduce unclaimed benefits further.
Savings
As far as retirement savings in South Africa are concerned, the outlook study also looked at the increased number of pension funds that applied for liquidation in 2020, the shrinking number of retirees who had an income and the low take-up of retirement products.
The FSCA said estimates show that only between seven and 10 million people have retirement savings products out of the 15 million employed people in South Africa. It said while there were approximately 16.4 million retirement funds members in 2021, that number double-counts people who have more than one pension product.
But even among the people who save, many are not putting away enough for their retirement years. The FSCA's retirement fund division found that the average contribution to pension funds is around R900 per month in real terms.
This under-saving for retirement resulted in only 12% of the 3.6 million people in the retirement age group receiving an income in 2020.
The low contribution to retirement funds, exacerbated by the Covid-19 lockdowns, was largely the reason why some applied for liquidation in 2020.
The number of pension funds that applied for liquidation that year increased by 21.5% due to financial distress as member contributions fell due to salary reductions, retrenchments and business closures. The majority of the funds that applied had smaller businesses as members. -Fin24/Bloomberg
The regulator published the Financial Sector Outlook Study on Tuesday, in which it also detailed progress made in finding people with unclaimed monies in pension funds and guardian funds.
The study showed that unclaimed retirement benefits increased to more than R47.3 billion at the end of 2021, rising from R42 billion previously reported for 2015 and 2018.
The FSCA's study showed that almost 80% of the unclaimed funds are with trade union-affiliated pension funds, and the majority of these unpaid members are low-income miners. There are 1 623 of these occupational retirement funds, and of the 4.8 million beneficiaries of unclaimed benefits in South Africa, 3.8 million should look for their monies there.
The second biggest area housing these funds is the unclaimed benefit funds. These are funds created by private sector investment houses specifically to keep money that has not been claimed for a long time. Beneficiary funds, which predominantly safeguard retirement benefits due to minor children, only have 0.2% of the unclaimed benefits to the value of R118 billion.
As the awareness of the billions sitting in unclaimed benefits grew, with the investment industry and the regulator taking flak from groups like the Unpaid Benefits Campaign, the FSCA implemented what it called the "Know-Your-Customer" directive.
The search engine implemented under that directive led to the payment of approximately R1.2 billion in benefits cited in the study.
The FSCA said while the National Treasury previously announced that it was looking at legislation that can consolidate unclaimed retirement benefits in one place, it continues to prioritise the fair treatment of beneficiaries and hopes to reduce unclaimed benefits further.
Savings
As far as retirement savings in South Africa are concerned, the outlook study also looked at the increased number of pension funds that applied for liquidation in 2020, the shrinking number of retirees who had an income and the low take-up of retirement products.
The FSCA said estimates show that only between seven and 10 million people have retirement savings products out of the 15 million employed people in South Africa. It said while there were approximately 16.4 million retirement funds members in 2021, that number double-counts people who have more than one pension product.
But even among the people who save, many are not putting away enough for their retirement years. The FSCA's retirement fund division found that the average contribution to pension funds is around R900 per month in real terms.
This under-saving for retirement resulted in only 12% of the 3.6 million people in the retirement age group receiving an income in 2020.
The low contribution to retirement funds, exacerbated by the Covid-19 lockdowns, was largely the reason why some applied for liquidation in 2020.
The number of pension funds that applied for liquidation that year increased by 21.5% due to financial distress as member contributions fell due to salary reductions, retrenchments and business closures. The majority of the funds that applied had smaller businesses as members. -Fin24/Bloomberg
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