South Africa has to deal with the issue of over R80 billion in unclaimed retirement benefits, prompting discussions over how to trace beneficiaries, and how to handle funds where the beneficiaries cannot be found.
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The government’s proposal in Budget 2026 to establish a centralised administrator for unclaimed retirement benefits is stirring conversations about efficiency, governance, and the overall effectiveness of such a system. With unclaimed benefits soaring to a staggering R88 billion across various retirement funds and insurance contracts, experts say that while the concept of centralisation shows promise, the path to reform is fraught with structural and governance challenges that demand careful consideration.
Henré Prinsloo, head of Employee Benefits at Momentum Corporate, underscores the gravity of the situation, emphasising that reform is not just desirable but necessary. “The scale of unclaimed benefits makes it vital that we find a better solution,” he notes, pointing out that a unified approach could lead to significant improvements in the tracking, verification, and eventual payment of beneficiaries. Currently fragmented methodologies leave many entitled individuals without access to their rightful funds, and a centralised system could bring about consistency and efficiency in this critical area.
“A single, uniform approach to tracing members, beneficiaries, and estates may lead to cost savings and improved outcomes compared to the fragmented methodology currently in place across the market,” Prinsloo explains. However, he raises an important caveat: “Establishing a central administrator will require a detailed legal and regulatory framework. That process is likely to take years, during which the problem could continue to escalate.”
Operational complexity adds another layer of difficulty. With numerous existing unclaimed benefit funds and administrators employing different tracing systems, transitioning to a singular structure presents logistical challenges. “Transferring funds, records, and responsibilities into a central structure will be a significant undertaking,” Prinsloo cautions, insisting that a careful evaluation of existing frameworks is essential before moving forward.
And as funds change hands, the safeguards protecting these assets become imperative. “Whenever large sums of money are involved, governance structures must be exceptionally strong. Clear oversight, transparency, and accountability will be essential,” Prinsloo states. The trust of the public hinges on robust governance protocols, especially in managing such vast sums of unclaimed wealth.
Prinsloo points out that administration might not be the fundamental issue driving unclaimed benefits. “The core challenge is often a lack of reliable information,” he explains. Many beneficiaries are either unaware that they are owed money or have lost track of their benefits over time. Centralising administration does not resolve deep-rooted historical record-keeping and data limitations, which complicate the issue.
Henré Prinsloo is head of Employee Benefits at Momentum Corporate.
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While several platforms currently enable users to check for unclaimed pension benefits, a significant number of funds remain unclaimed, often for extended periods. “This raises a broader policy question,” Prinsloo reflects. “After exhaustive tracing efforts and advertising over a defined period, should these funds remain in perpetuity in a central structure, potentially eroded over time, or is there a mechanism to redirect them for broader societal benefit?”
Such discussions touch on complex legal considerations that require careful navigation, but Prinsloo believes they are paramount for progress. “Currently, this capital is not benefiting anyone. In a country with substantial capital needs, there may be avenues for these funds to support social and economic development while still protecting beneficiaries’ rights.”
While the notion of a centralised administrator holds merit, achieving successful reform mandates addressing operational, governance, and data realities comprehensively. Prinsloo adds: “Centralisation may improve co-ordination, but it will not eliminate the core tracing challenges overnight. A balanced and carefully governed approach is essential.”
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