Frustration and tragedy haunts legacy of untraceable workers’ wasted benefits

Just three hours before the Constitutional Court ruled against activist Rosemary Hunter, saying that the Financial Sector Conduct Authority (FSCA) was not obliged to do more investigation on the controversial funds cancellation project, Mapaseka Mabe reached out to the media to try to find her late father’s provident fund benefits.
"Hello, please I’m asking you to help me check my father’s provident fund. He is an ex-mine worker," Mabe wrote to Business Day on Thursday morning. The 27-year-old Free State-born woman said she has been trying to find her father’s provident fund benefits since 2013. Her father, who worked in two mines between 1987 and 1996, contributed R43.21 of his meagre R966 salary to a provident fund in 1995, his payslip shows. He died in 2016.
"But we never got anything since he stopped working in 1996. He died without getting anything," said Mabe.
Mabe is among millions of beneficiaries who are struggling to lay their hands on their family members’ work benefits.
While it is not clear what happened to her father’s benefits, in most cases funds beneficiaries are struggling to claim have been moved to unclaimed benefits funds. The FSCA reported in September 2017 that there was more than R42bn in unclaimed benefits in SA and that about 4 million beneficiaries were affected. The benefits are administered by several private and public funds, and not the FSCA. But the watchdog said it had been assisting people who didn’t know how to claim.
Treasury’s deputy director-general, Ismail Momoniat, says companies that administer unclaimed benefit funds are the ones responsible for finding the right beneficiaries. Treasury and the FSCA have been pushing to get the funds allocated.
"Those [unclaimed] funds are still with the companies that administered the cancelled funds. We can’t interfere in what they do with specific funds.
"But since [divisional executive of retirement funds, Olana] Makhubela’s been there, a lot of progress has been made," says Momoniat.
While he does not dispute the need to allocate unclaimed benefits to their owners, Momoniat says Hunter’s legal challenge unnecessarily held up Treasury’s attempts to push down costs in the retirement industry. By consolidating retirement funds to fewer but larger schemes, their economies of scale will hopefully reduce their administration cost significantly. "Forty percent of workers’ benefits is taken up by charges. If you don’t consolidate, you won’t bring down the charges."
In a statement sent on Monday, the Treasury said it was aiming to deregister genuinely inactive funds. In the FSCA case, some funds were cancelled with multimillion rand in assets and some even had active members. The Treasury said before proceeding with the consolidation, it will engage the FSCA to study the judgment in further detail as well as other key stakeholders to address concerns.

"Treasury believes that the majority and both minority judgments offer valuable insights and observations to inform improvements in the consolidation process," it said.
Desperation from beneficiaries has seen some fall prey to scams. In 2017 the FSCA warned the public about a company purporting to assist people to claim surplus benefits if they or their family members ever worked in the motor manufacturing industry.
ICTS Tracing Services is one of the legitimate tracking companies contracted by some of the administrators of unclaimed benefits funds. MD David Weil says there has been a concerted effort by most of the institutions involved to track beneficiaries, but tracking people using historical records can be a challenge. Workers’ names were misspelt; some had no ID numbers on file while there were instances where people were not registered by their own names at work.
"Fica [Financial Intelligence Centre Act] has made it easy to trace people in SA. I’d say about 60% of the people are traceable now. We trace about 6,000 to 10,000 beneficiaries a month. But obviously it depends on the data we are given. If we have an ID number or date of birth, the odds of tracing the beneficiary improve a lot."
Weil, however, says that tracing the beneficiary is only half the battle won. "The big challenge is in the rural areas. People don’t have an understanding of how to get the required information to us. Some don’t even bother. There’s a lot of mistrust because of the scam incidents. Sometimes the amount due to the beneficiary is too little they can’t be bothered to pay the tracing fees. There’s also the challenge of registering with Sars [SA Revenue Service]. Many of the beneficiaries have never had to register for tax in their lives."
Weil says beneficiaries outside of SA — mostly in Namibia, Lesotho, Botswana and Swaziland — are particularly difficult to trace.
Attempts to recover unclaimed benefits have led to the formation of a movement called the Unclaimed Benefits Campaign. Beneficiary Douglas Maila says many struggling people in the townships would be doing better in life if they got what was due to them.
"Around the township we’ve got children we call names like Nyaope. But those who didn’t pay death benefits to those poor kids and orphans created those nyaope kids," says Maila.
He says even if the FSCA did more probes into cancelled funds he has no confidence in that. "The FSCA is investigating itself. How can it expose itself?" says Maila.



Civil servants to sue state for pensions

One of the biggest class actions against the state pension fund will unfold later this month.
More than 80,000 former Transkei civil servants from Butterworth, Sterkspruit, Mthatha, Matatiele, Kwa Bhaca, Maluti, Mzimkhulu, Kokstad, Komani, Lusikisiki, Ntabankulu and Flagstaff are taking on the state over the way their pensions were transferred from the old SA fund to the new.
They are calling on all disgruntled pensioners to come forward so they can sue the Government Employment Pension Fund (GEPF).
The GEPF was started in 1996 but some civil servants say they has been paying towards their pensions since 1976 but their pensions were not integrated into the new system.
A committee formed by the pensioners has launched a case which will be argued in the North Gauteng high court on October 29.
One of the committee members, Thobile Ndabambi, said he had been working for the department of defence for 10 years but he was only paid out a pension for two years.
“There are many people who have been affected by this who have died due to stress-related conditions.
“It seems as if the government does not care about our plight.
“We are not asking for any favours, but we are simply asking the state to pay us what is due to us, money that we worked for,” Ndabambi said.
In their court papers, the group said GEPF was in breach of the civil servants’ constitutional rights.
The members, they say, sustained damages and suffered prejudice due to the governments mishandling of their exit from the Transkeian Government Service Pension Fund when they were incorporated into the GEPF.
Public service and administration minister Ayanda Dlodlo told journalists that, as of May, there were 44,190 cases of unclaimed and unpaid benefits.
The Government Pensions Administration Agency (GPAA), which is responsible for administering pensions on behalf of the GEPF, stated that it had 26,919 cases of unpaid benefits, amounting to R907.1m, and 17,271 cases of unclaimed benefits, valued at R698.9m.
GPAA spokesperson Mack Lewele said: “We are however unable to comment on the matter because it is before the courts.”