Government wants to take control of R88 billion owed to millions of South Africans

The National Treasury has proposed creating a single, centralised system to help South Africans find and claim the R88 billion that belongs to them. 

This R88 billion belongs to millions of South Africans from forgotten retirement fund payouts, dormant bank accounts, and unpaid insurance claims, and investment returns. 

The money has largely become untraceable as people changed jobs, moved houses, changed surnames, or passed away. 

Financial institutions have individually been running programmes to help people find the money they are owed. The government wants this to change. 

The National Treasury published a discussion paper proposing a single, centralised system to help South Africans find and claim that money. 

Momentum Corporate’s head of legal and compliance, Ashendran Padayachee, said this would require that assets be transferred into the custody of a government entity. 

Rather than each bank, insurer, retirement fund, and investment provider running its own separate tracing process, a central administrator would maintain a single database. 

This would enable it to coordinate tracing efforts, run a single public-facing claims portal and process valid claims on behalf of companies. 

The Treasury said the assets would be held in custody by the Corporation for Public Deposits, while remaining the property of their rightful owners. 

Padayachee said the plan is incremental, starting with unclaimed retirement fund benefits before expanding to banking, insurance, and investment products. 

For the first time, the Treasury has also proposed that the claims will expire and be shifted into the national revenue fund. 

The timelines it proposed are 45 years after an asset became payable or after the owner turns 110. 

This is aimed to give the system a practical endpoint, but raises questions about a threat to an individual’s right to money that is legally theirs. 

Big questions 

Padayachee explained that the issue of unclaimed benefits has been long-running, stemming from an ambition to serve clients from the cradle to the grave. 

“Unclaimed benefits are the result of poor member data quality, incomplete employer records, and cross-border migration,” he said. 

“There has also been industry-wide weakness in maintaining up-to-date contact details for clients over time.”

Treasury’s proposal does not address these root causes and the lack of data infrastructure to enable adequate member data collection and storage. 

Padayachee also explained that the Treasury’s approach does not fully capture the problem in South Africa, as the challenge is not the lack of a centralised channel. 

National Treasury has drawn extensively from international experience and is importing approaches from elsewhere into a unique local situation. 

The biggest question is whether a centralised administrator is necessary to solve the problem, or whether Treasury should focus on raising standards across existing efforts by financial services providers. 

 “A system of common standards applied consistently across existing administrators could offer many of the same benefits with less disruption, lower setup costs, and greater speed to implement,” Padayachee said. 

“There is also the operational risk of concentrating so much data and process in one place to consider: cyber risk, platform failure, and the sheer scale of coordinating a system this large.”

A more serious concern with a centralised system is trust in the government as the custodian and administrator of these funds.

“It is reasonable to ask whether the institutions responsible for holding the assets, safeguarding them, and tracking down the rightful owners have earned that level of confidence,” Padayachee said. 

“South Africa’s recent history with governance and accountability at state-affiliated entities has been, at best, uneven.”

“For many South Africans, the instinct to be cautious about handing large pools of capital to a new centralised body, however well-intentioned, is not an unreasonable one.”