Many South Africans appear not to be too careful about their money.

According to media reports sourced from Erica Liebenberg of Just Money, there is a pool of R89bn 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, are unaware of the entitlements, or are too disengaged from their finances to care or investigate whether they are entitled to any part of this treasure trove.

Based on the track record of these unclaimed pensions, provident funds, insurance benefits, Unemployment Insurance Fund 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.

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

As the funds belong to those in whose names they have been invested and are claimable, it will be necessary to expropriate or legislate to be able 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 the government may spend the windfall it receives by changing the law. The entire unclaimed amount could be transferred to the government provided it undertakes to pay valid late claims.

The dispute in the government of national unity over increasing VAT to balance the national budget could be obviated by legislating that some of the unclaimed funds be applied, 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.

Unfortunately, as is so often the case, the political will, and the imagination, to do the necessary is absent.

Paul Hoffman
Director, Accountability Now