The government wants to take over R88 billion owed to ordinary South Africans
The National Treasury has proposed a centralised system to help millions of South Africans track down and claim an estimated R88 billion in unclaimed money.
However, concerns have been raised about whether putting such a large pool of assets under a single administrator is the right solution.
The R88 billion comes from forgotten retirement fund benefits, dormant bank accounts, unpaid insurance claims, and investment returns.
It has become difficult to trace as people change jobs, move homes, change surnames or leave the country, while records can become outdated over time.
In some cases, the rightful owner may have died without their beneficiaries knowing about the money.
Financial institutions currently run their own tracing programmes to reunite people with these assets. However, the National Treasury now wants to replace this approach with a single system that would centralise the process.
Under the proposal, a central administrator would maintain a database of unclaimed assets, coordinate tracing efforts and operate a public-facing claims portal. It would also process valid claims on behalf of financial institutions.
Treasury has proposed that the assets be held in custody by the Corporation for Public Deposits, while remaining the legal property of their rightful owners.
The proposal would initially focus on unclaimed retirement fund benefits before being expanded to banking, insurance, and investment products.
However, Treasury has also proposed that claims eventually expire, with the assets transferred to the National Revenue Fund.
The proposed period is 45 years after an asset becomes payable or after the owner reaches age 110. Treasury argued that this would give the system a practical endpoint.
However, the proposal has raised questions about whether the state should ultimately be able to take control of money that legally belongs to an individual.
Ashendran Padayachee, Head of Legal at Momentum Corporate, is among those who have questioned the proposal.
Concentrating could create new risks
Padayachee said the problem of unclaimed benefits is partly linked to the quality of member information available to financial institutions, incomplete employer records, and people moving across borders.
Keeping contact details up to date over the full life of a financial product is also a major industry challenge.
“As a financial institution, we often talk about a cradle to grave product and service methodology without necessarily focusing on client data to support that methodology over a product’s full lifecycle,” he said.
While Treasury has drawn on international experience in developing its proposal, Padayachee cautioned that South Africa’s circumstances may differ from those in other countries.
He described the discussion paper as a reasonable starting point for a broader industry debate about reuniting people with their money.
Padayachee suggested that the Treasury consider a system based on common standards applied consistently across existing administrators rather than immediately centralising the entire process.
“A system of common standards applied consistently across existing administrators – effectively levelling the playing field – could offer many of the same benefits with less disruption, lower setup costs, and greater speed to implementation,” he said.
He also warned that concentrating sensitive financial data and processes in one place could create new risks, including cyberattacks, platform failures, and governance problems.
“Centralising the management of unclaimed benefits and the operationalisation of such a model should not divert attention from the core focus, which is ultimately the reunification of unclaimed assets that is demonstrably an improvement on existing models,” he said.
“The paper suggests that an asset ceases to be claimable after 45 years after the asset became payable to the owner or when the owner reaches 110,” Padayachee said.
He believes these thresholds require further consideration because of the potential legal implications for ownership rights.
He also questioned whether the existing 24-month definition of an “unclaimed” benefit under the Pension Funds Act should simply be applied across other financial products.
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