19 Sep The cost of unclaimed benefits
A significant portion of unclaimed funds is retirement fund related. What are the reasons for about R 42 billion being unclaimed by beneficiaries? In the hands of beneficiaries, these funds can be used for spending, investing or debt repayment which all play a role in stimulating our economy.
Incomplete, inaccurate or missing beneficiary nomination forms is a primary cause of unclaimed funds. Employers and fund administration companies can play a more effective role in communicating to members and educating them, ensuring that beneficiary nomination forms are not only fully completed but updated as the member’s circumstances change. For example, a basic necessity is having the beneficiaries latest contact details on file.
Other reasons for unclaimed funds can include:
- Employers not providing detailed and accurate member data.
- Poor record keeping and poor administration by fund managers.
- The fund member neglects to inform beneficiaries that provision has been made for them.
- Poor education regarding the member’s entitlement on resignation, dismissal or retrenchment, or how to claim a benefit.
While fund administration companies take all reasonable steps to trace a beneficiary, it can be an extremely challenging and lengthy task if basic information is missing.
What steps can be taken to ensure that funds reach the pockets of beneficiaries?
The member needs to understand the latest value of their fund. Salt EB has an app which provides this information to members. This serves as an incentive to take all steps possible to ensure that either they or their nominated beneficiaries receive the benefits due to them. To create the connection between fund value and realisation of that value, relatable education and communication is needed. For example, what are the missed opportunities or hard cost of not completing and updating a beneficiary nomination form? Hardship for widows. Children deprived of education. Accumulated debt. Challenging retirement. Forfeited holiday.
We must shift the mindset of a complete and updated beneficiary nomination form from an administrative challenge to a ticket to life enablement.
salteb.co.za
Salt EB is South Africa’s leading independent employee benefit management company.