South Africa’s R48 billion untapped gold mine

South Africans have R48 billion in unclaimed pension assets, which have the potential to substantially boost South Africa’s economy.

Robin Hood said that the introduction of the two-pot system and unclaimed benefits could add massive contributions to the South African economy. 

Robin Hood said that unclaimed benefits have the potential to release R90 billion back into the South African economy, while the South African Reserve Bank’s moderate expectations see the economy being boosted by R31.5 billion by Q4 2024 by the two-pot system.

“The flow of additional funds will also significantly increase the tax revenue collected by SARS and in SARB’s moderate scenario will 0.1 and 0.3 percentage points respectively to GDP growth in 2024 and 2025,” said Robin Hood.

SARS recently announced that R35 billion in outflows have occurred since the system’s launch.

“Pension Funds rely heavily on Administrators to oversee and manage pension money on behalf of the members,” said Robin Hood.

“The introduction of the two-pot system has increased the workload for administrators in the short term who typically only payout members when they are exiting a fund, but with these new changes, it is expected that the number of payouts will increase by possibly four or five times the normal amount.”

Many administrators are also charging a flat fee for members withdrawing from their Saving Pot regardless of the amount being withdrawn. 

Instead of charging clients for withdrawing from their retirement savings, Robin Hood said that fund administrators should prioritise unclaimed benefits.

“Solving this societal problem would strengthen trust in corporate institutions, and returning these funds first would ease some of the immediate financial strain on citizens without diminishing their existing retirement savings,” said the group.

Unclaimed pension benefits alone are estimated at R48 billion, with money owed to 4.5 million South Africans.

That said, 20% of this amounts to less than R1,000, which generally is considered uneconomical to resolve.

Robin Hood, in partnership with Standard Bank’s OneHub, focuses on returning unclaimed assets to their owners. Its technology is designed to return even the smallest of benefits to beneficiaries.

Standard Bank-owned Liberty is one of the early adopters and is currently piloting a project to address its unclaimed pension benefits.

“Returning unclaimed assets could reduce the need for members to withdraw from their current pension savings, potentially leaving them in a stronger financial position for retirement,” said Robin Hood.

Many South Africans are expected to spend heavily in November and December, with Black Friday and Christmas right around the corner.

Research commissioned by fintech Capital Connect showed that South Africa’s wholesale, retail and fuel sectors are expected to generate over R88 billion in additional economic value for the economy during November 2024.

With the rise in Black Friday spending, many financial services providers have warned that fraudsters will target unsuspecting South Africans.

Read: Major crackdown on companies and municipalities in South Africa – with possible jailtime for leaders