The latest Financial Sector Outlook study from the FSCA shows that unclaimed pension benefits have increased to over R47.3 billion in 2021.
- The FSCA released the Financial Sector Outlook Study on Tuesday.
- It shows that unclaimed pension benefits have increased to over R47.3 billion in 2021.
- The FSCA’s search engine has so far only led to the payment of around R1.2 billion in benefits.
Attempts by the Financial Sector Conduct Authority (FSCA) to reunite unclaimed pension benefits with their rightful owners have only helped more than 14,000 people secure R1.2 billion in payments.
The regulator released the Financial Sector Outlook Study on Tuesday, in which it also details progress in finding people with unclaimed funds in pension funds and custodial funds.
The study showed that unclaimed pension benefits increased to over R47.3 billion at the end of 2021, from the previously reported R42 billion for 2015 and 2018.
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The FSCA study showed that nearly 80% of unclaimed funds are with union-affiliated pension funds, and the majority of those unpaid members are low-income miners. There are 1,623 such occupational pension funds, and of the 4.8 million unclaimed benefit recipients in South Africa, 3.8 million are expected to seek their money there.
The second largest area housing these funds is unclaimed benefits. These are funds created by private sector investment companies specifically to hold money that has not been claimed for a long time. The beneficiary funds, which mainly preserve the retirement benefits due to minor children, have only 0.2% of the unclaimed benefits for a value of 118 billion rand.
As awareness of the billions of dollars remaining in unclaimed benefits grew, with the investment industry and regulator taking criticism from groups such as the Unpaid Benefits Campaign, the FSCA put in place implemented what she called the “know your customer” directive.
The search engine set up under this directive led to the payment of around 1.2 billion rand in services cited in the study.
The FSCA said that while the National Treasury had previously announced it was considering legislation that could consolidate unclaimed pension benefits in one place, it continues to prioritize the fair treatment of beneficiaries and hopes to further reduce unclaimed benefits. claimed.
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Image of SA’s disastrous retirement
With regard to retirement savings in South Africa, the prospective study also looked at the increase in the number of pension funds that filed for liquidation in 2020, the decrease in the 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 people employed in South Africa. He said while there were about 16.4 million retirement fund members in 2021, that number doubles as people who have more than one retirement product.
But even among those who do save, many are not saving enough for their retirement years. The Pension Funds Division of the FSCA has found that the average contribution to pension funds is around R900 per month in real terms.
This undersaving for retirement meant that only 12% of the 3.6 million people of retirement age received income in 2020.
The low contribution to pension funds, exacerbated by the Covid-19 lockdowns, was largely the reason some sought liquidation in 2020.
The number of pension funds that filed for liquidation that year increased by 21.5% due to financial difficulties, as member contributions fell due to pay cuts, cutbacks and business closures. The majority of funds that applied had small business members.
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