By Paul Hoffman

There is currently some R89bn swilling around in the financial services sector that is unclaimed.

It emerged during the interview that there is currently a pool, or more accurately pools, aggregating some R89-billion swilling around in the financial services sector that is unclaimed by those who are entitled to claim their share of it, but don’t.

Often this is because beneficiaries are long dead, unaware of the entitlements. Some are too disengaged with their finances to care or to look up whether they are entitled to any part of this treasure trove. Most helpfully, Liebenberg dispensed advice on tracing unclaimed benefits in various ways, using different means.

Based on the track record of these unclaimed pensions, provident funds, insurance benefits, UIF entitlements, dividends, dormant bank account balances and the like, it is possible to actuarially calculate how much is likely to be claimed in the foreseeable future. It is a small fraction of the total, which has grown exponentially over the years and continues to grow.

The financial services sector administers the bulk of the funds – most of which are pension or provident fund benefits – for a fee and, understandably so, has no objection to earning easy money in this way.

Some have made what Ms Liebenberg referred to as a “lucrative business” out of the unclaimed funds under their administration. Some 63% of the unclaimed funds are pensions and provident fund entitlements that remain due, but are unclaimed.

Why this should be so when it is possible to make rules for the forfeiture of unclaimed benefits and entitlements is a story for another day.

As the unclaimed funds belong to those in whose names they have been invested and are claimable, it will be necessary to expropriate or legislate in order to find a useful home for the funds. This process is probably best done by legislation that protects those who may emerge to claim late, and which limits how government may spend the windfall it receives by changing the law in order to take charge of the funds.

The entire amount currently unclaimed could be transferred to government provided it undertakes in the legislation to pay valid late claims.

VAT increase alternative

The Government of National Unity’s (GNU’s) potentially fatal dispute over possibly increasing VAT to balance the national Budget could be obviated by legislating that some or all of the unclaimed funds be applied, say for example, in the basic education sector – thereby freeing up more than the increase in VAT would realise, at least in the first year, if not for longer.

This strategy would give the GNU the time needed to identify effective cost-cutting measures, formulate policies to end public service incompetence and to render the public administration compliant with the criteria (called “values and principles governing public administration” as set forth in section 195(1) of the Constitution, a section that has been a “dead letter” for many years.)

In constitutional theory, these principles apply to administration in every sphere of government, to organs of state and to public enterprises (commonly known as “state-owned enterprises”).

The breathing space afforded by the state’s appropriation of the unclaimed funds would also create time and space for government to establish effective and efficient anti-corruption machinery of state, namely that long-awaited single body outside the control of the executive as was required, in binding terms, in the Glenister litigation.

The law is spelt out clearly in paragraph 200 of the majority judgment in Glenister Two which is available by downloading “Under the Swinging Arch” and scrolling down to para 200 on page 210.

There are already two private members’ Bills before Parliament on the establishment and enabling of a new Chapter Nine Anti-Corruption Commission, which were introduced in November 2024 by Glynnis Breytenbach of the Democratic Alliance, which is a member of the GNU.

These two Bills are designed to implement the findings of the Constitutional Court. It required that the new body be specialised, trained, independent, resourced in guaranteed fashion and secure in tenure of office (the STIRS criteria). No such body was set up either in the pre-GNU period or since then.

A fruitful debate on the Bills could rapidly give rise to the setting up of the new Chapter Nine body, which would be properly capacitated to rake back the loot of State Capture.

In this way, it will be possible to relieve government of its current financial problems which have given rise to the inter-party dispute concerning the use of an increase in VAT to balance the Budget of government. Some measure the loot of State Capture in the trillions, most, if not all of it, public funds. Many members of the ANC do not support the notion of increasing VAT because of its anti-poor character.

The claimants who have not come forward to claim their entitlements, most of whom are probably long dead and whose deceased estates are either unreported or closed, would probably be pleased to know that their money is being applied to enhance the lot of the youth of the country instead of simply for the enrichment of financial institutions which currently administer it.

As is so often the case, the political will, and the imagination, to do the necessary are absent. DM