Given the high levels of poverty in South Africa – and the fact that most middle class people are struggling to keep their heads above water in a flagging economy – it is quite shocking that more than R43 billion has not been claimed by pension fund beneficiaries.
The figure comes from the latest annual financial statements for the year ending 2019 submitted to the Financial Sector Conduct Authority (FSCA) by retirement funds.
The funds place the value of unclaimed benefits at R43 billion – with approximately 4.8 million members who have not claimed.
Professor Jannie Rossouw from the Wits Business School said: “Should this money be paid out and the beneficiaries spend it, it will make a substantial difference in the economy.”
What worries him, however, is what will happen to the money if a member or beneficiary dies.
Nonprofit organisation Open Secrets said the high number of unclaimed pensions represented a fundamental failure by state regulators and pension fund administrators.
The organisation said it was immoral that poor people should have money deducted from their wages for decades and then not receive their pension when they retire, move or lose their jobs.
There is, clearly, a need for much more through education of both pension fund members and their beneficiaries about the mechanics of securing what is rightfully theirs.
Is it too cynical to wonder whether it is in the interests of the funds themselves to implement such education programmes, given that vast amounts of unclaimed funds represent a huge windfall for them in terms of management fees and investment potential?
The government needs to pay closer attention to this because it could drastically reduce the need for poverty alleviation programmes and social grants.