National Treasury has released a discussion paper on centralising the more than R88 billion of unclaimed financial assets, which builds on its plan to create a central administrator responsible for record keeping and tracing, but it warns that you may lose the benefit over time if it is not claimed.
The paper follows on the Financial Sector Conduct Authority’s (FSCA) 2022 and 2024 reports on unclaimed financial assets. These unclaimed assets typically include dormant bank accounts, unclaimed retirement benefits, and unpaid dividends, investment and insurance proceeds. In 2022, the estimated value of these assets was R88bn.
In the Budget Speech this year, Finance Minister Enoch Godongwana said that “National Treasury will introduce reforms to manage these unclaimed benefits through the creation of a central administrator responsible for record keeping and tracing”.
The proposed reforms aim to improve the identification, tracing and payment of owners and beneficiaries of unclaimed financial assets, while creating a consistent national approach to how these assets are recorded, administered and managed.
Given the international experience and the circumstances of South Africa, a clear cut-off period may be introduced for claims on unclaimed financial assets, National Treasury says.
The discussion suggests two options for establishing a final limit on claims relating to unclaimed financial assets, to “promote legal certainty, encourage timely claims, and reduce the administrative costs associated with maintaining unclaimed assets indefinitely.”
These include an age-based cut-off, for example 110 years, under which an unclaimed financial asset would cease to be claimable once the owner reaches, or would have reached, the age of 110 years, while a second option may be a fixed period of unclaimed assets, say for 45 years, and under this method the asset would cease to be claimable 45 years after it first becomes unclaimed.
Momentum Corporate head of employee benefits Henré Prinsloo said at the time of the budget that the scale of unclaimed benefits makes it vital “that we find a better solution.” A unified approach could lead to significant improvements in the tracking, verification, and eventual payment of beneficiaries.
The paper from National Treasury proposes establishing a central administrator for unclaimed financial assets. The administrator will be responsible for record-keeping and tracing of asset owners and beneficiaries. It also considers institutional options for the central administrator, including establishing a new entity or appointing an existing administrator with the necessary scale and capabilities.
National Treasury further proposes that financial institutions holding unclaimed financial assets be required to transfer those assets to the central administrator and invest with the Corporation for Public Deposits (CPD), a subsidiary of the South African Reserve Bank, responsible for managing public deposits from various governmental entities.
This would replace the current fragmented approach with a single, accountable system for consolidating information, improving tracing efforts, standardising record-keeping and safeguarding the unclaimed assets, pending lawful claims by owners and beneficiaries, National Treasury says.
“By consolidating assets on a scale through the central administrator and investment with the CPD, the proposed model should also help reduce the erosion of unclaimed assets due to fragmented administrative costs,” National Treasury said.
The proposed reforms to address unclaimed financial assets will be implemented in phases, commencing with unclaimed retirement benefits and subsequently extending to other sectors.
THE NATIONAL
edward.west@nationalmg.co.za