Insurance companies, banks and other financial institutions are sitting on R88-billion in retirement fund benefits belonging to hundreds of thousands of potential beneficiaries they have been battling to trace.
Now National Treasury wants to take over and centralise the management of this money and how it is distributed.
In the Budget Review 2026, Treasury outlined intentions to centralise the management of the R88-billion haul, arguing this move could help speed up the process of tracking policyholders and their beneficiaries who are rightfully entitled to payouts.
“Government is implementing a reform to centralise the management and investment of over R88-billion in unclaimed financial assets, which include retirement benefits, bank accounts, investments and insurance payouts.
“This reform aims to ensure that the benefits of these assets accrue to the asset owners rather than to financial institutions, government or any other parties. The proposed framework provides for the transfer of these assets to a central manager to drive down costs and improve payouts with appropriate governance for investment, alongside the appointment of a central administrator responsible for administration, record-keeping and tracing,” National Treasury said in the budget review document released when finance minister Enoch Godongwana tabled his budget last month.
It said the reform would be rolled out in phases, starting with the retirement fund sector, but could be extended to other categories of unclaimed benefits, including dormant bank accounts, investments and insurance payouts.
A discussion document outlining this proposal would soon be released for public consultation, Treasury added.
The Treasury declined to comment further when contacted for comment, saying the discussion document would be released later this year.
However, the proposal is in line with an earlier one from the Financial Sector Conduct Authority (FSCA), which also calls for a centralised approach to managing the unclaimed benefits.
“The FSCA advocates that unclaimed assets should not be retained by financial institutions over the longer term. Not only does this potentially compromise an entity’s commitment to finding and maintaining contact with customers, but it is also not fair for the rightful beneficiaries,” the regulator noted.
The Association for Savings and Investment South Africa (Asisa), which represents the asset management industry, said it would only comment in detail once the discussion note is released for public consultation.
Spokesperson Lucienne Field said, however, that their members were governed by guidelines, which state that the first priority is to reunite owners with their assets.
Field said customers’ rights to unclaimed assets do not expire until the funds are paid out or returned, regardless of how long it takes. Such assets should never become the property of product providers or their shareholders.
She conceded that beneficiaries were difficult to trace mainly due to contact details being outdated. In some cases, administrators are unaware that a policyholder has died because no notification has been received from family members or other third parties, Field said.
It is also common for individuals to lose track of their financial products, while others may not even know they have been named as beneficiaries.
“Asisa, therefore, encourages consumers to ensure that a record of policy details and investment accounts, as well as bank accounts, is shared with someone trustworthy, whether a relative, close friend, financial adviser or estate planner. This record should be placed in safekeeping together with an up-to-date copy of your will,” Fild added.
Old Mutual, which holds about R1.7-billion in unclaimed financial assets, warned in a results presentation that Treasury’s proposal to transfer unclaimed retirement benefits to a centralised fund could have implications for its retirement administration business.
Michelle Acton, chief customer officer at Old Mutual Corporate, said the company supports the principle of centralisation and is engaging with regulators to help shape a workable solution.
“A key challenge across unclaimed benefit funds is the quality of historic member data, where incomplete or outdated records can make tracing and verification difficult. Despite this, our focus remains on helping to trace members and beneficiaries and on processing valid claims as efficiently as possible,” said Acton.
Radebe Sipamla, investment analyst at Mergence, said unclaimed retirement and other benefits were best left in the hands of the private sector to distribute to beneficiaries and their next of kin because of concerns around state capacity and corruption in the public sector.
Sipamla, however, suggested that the R88-billion could be invested in infrastructure projects. “The critical bottleneck though, is that the state has seen its credibility and goodwill in managing vast funds eroded, so the likelihood of the state using the funds effectively is low.”
