There is a new industry mushrooming in the financial services sector. It is based on finding the rightful owners of the many billions of rands that lie unclaimed in pension fund surpluses, pension fund benefits, unclaimed life assurance policies and shares from the demutualisation of Old Mutual and Sanlam. The tracing industry is based on establishing whether you have a stake in this multi-billion rand pie.
However, as is too often the problem in the financial services industry, the interests of the people who should benefit from these unclaimed monies, are, in some cases, secondary.
Some of the companies set up to trace you and/or establish whether you have a stake, seem to be going about it the right way, but others are using it as an opportunity to make a quick buck. In many cases, you do not need these tracing agents at all.
You need to be very, very careful before you appoint a tracing company to search for your "hopeful millions" left to you by maiden aunt Mathilda.
The biggest single danger you face is one of fraud. You may give your name and details to a tracing agent, but never receive the money you want to claim. Instead, the money will go into someone else's pocket.
Here are a few guidelines for you to follow when claiming your due:
Step 1: Check your records
Go back and check your own records for such things as a life policy you may have stopped paying into (it may still have a value); or a policy you may have ceded to a bank for a loan; or a unit trust you may have forgotten about. Look at old bank statements which will reflect debit orders for such payments.
Step 2: Check official sources
This can be done in many ways. If you suspect you are entitled to:
- A retirement fund benefit. Whether this is a straightforward pension benefit, a benefit as a dependant of a member or former member, or as a beneficiary to a surplus distribution, first check with the fund itself. Put your enquiry in writing to the principal officer of the fund.
If you receive no joy from the fund, go directly to the Financial Services Board (FSB), the financial services industry watchdog. Contact the FSB on the tollfree number: 0800 110 443. The FSB will tell you, for example, whether your fund has a surplus and how to go about making a claim. If you have problems in claiming benefits, you can raise this with the FSB.
If you feel your fund is treating you unfairly and not giving due consideration to your claim, you can also contact the Pension Funds Adjudicator at 021 674 0209.
You do not have to pay for any of these services.
As a matter of interest, discussions are being held between retirement industry bodies and the FSB about transferring all unclaimed pension benefits to a central fund administered by the FSB.
- A life assurance benefit. If you suspect you are entitled to a life assurance benefit, contact the life assurance company/ies where you suspect the policy/ies may have been held. Again, put your enquiry in writing.
If you draw a blank, you can contact the Life Offices' Association (LOA), which represents most of the life assurance companies.
Gerhard Joubert, the executive director of the LOA, says last year the LOA formulated and implemented a new code on unclaimed benefits to ensure that policyholders or beneficiaries are informed of the benefit of a policy and assisted to take whatever action is needed to get the payment.
In terms of this code, you are required to complete a lost policy enquiry form, which is circulated to all LOA members. Upon receipt of this query, LOA members check their records and establish whether a policy exists. The person making the enquiry will then receive information on the policy and the benefits due.
If you want a lost policy enquiry form, you can download it from the LOA's website (go to www.loa.co.za and click on Code of Conduct, then on Chapter 23, the Code on Unclaimed Benefits); write to the LOA at P O Box 5023, Cape Town 8000; fax the LOA (021 421 2599); or email [email protected]
If you feel you are being unfairly treated, you can contact the Ombudsman for Long-term assurance, Judge Peet Nienaber, at 021 674 0330.
All these services are free.
- Unclaimed shares from the demutualisation of Sanlam and/or Old Mutual. About R1.7 billion of free Old Mutual and Sanlam shares have yet to be claimed. To find out if you have a claim, call Old Mutual at 0861 61 90 61 and Sanlam at 021 950 3000. This service is free.
Step 3: Using a tracing agent
If you have exhausted all of the options, consider using the services of a tracing agent. But follow these precautions:
- Do not pay any money upfront or agree to pay anything after an unsuccessful search. Many tracing agents are asking for as much as R500 upfront. If you pay upfront it will probably be the last you will hear of any possible claim.
- Establish how the tracing agent will be paid. About five percent of the value you receive should, in my view, be the upper limit. Anything over 10 percent is exorbitant.
- Insist that the claimed amount be paid directly to you and not to the tracing agency.
- Do not sign any forms that cede a claim to a third party or make a third party a beneficiary.
- Do not sign any agreement that entitles the tracing agent to invest the money on your behalf. Rather use your financial adviser.
- Read all documentation. If you do not understand the terms, do not sign the document/s.
Events to diarise
There are some important conferences coming up this month that people involved in both the retirement industry and life assurance industry should consider attending.
The first is the annual conference of the Institute of Retirement Funds (IRF) in Cape Town from August 17 to 19. In my view, this seminar is essential for trustees, principal officers, administrators and the various service providers.
The IRF has lined up an impressive array of speakers that will cover a wide range of subjects, from Aids to umbrella funds and investments.
Anyone wanting to know more about the IRF conference can contact the IRF at 011 482 1227 or go to the institute's website www.irf.org.za
The second event is the first convention of the Life Offices' Association, which will be held outside Hermanus on August 28 and 29. The convention is of importance to anyone who wants to know what is happening in the life assurance industry.
For further details call 021 592 5214, or email [email protected]