R88bn is sitting unclaimed. Who should be trusted to find the rightful owners?

South Africa’s financial system is sitting on an estimated R88 billion that belongs to people who don’t know they’re owed it. Forgotten retirement fund payouts, dormant bank accounts, unpaid insurance proceeds, and unclaimed investment returns – money that, in many cases, has become untraceable as people changed jobs, moved house, changed surnames, or passed away without their beneficiaries ever being told what they were due.

National Treasury recently published a discussion paper proposing a solution: a single, centralised system to help South Africans find and claim that money. Rather than each bank, insurer, retirement fund, and investment provider running its own separate tracing process, a central administrator would hold one consolidated database, coordinate tracing efforts, run a single public-facing claims portal, and process valid claims on behalf of financial institutions across the industry. The unclaimed assets themselves would be transferred into safe custody with the Corporation for Public Deposits – remaining, in law, the property of their rightful owners – while a central body takes on the administrative burden of finding those owners.

The plan is deliberately incremental. It would start with unclaimed retirement fund benefits, before eventually expanding to banking, insurance, and investment products. Treasury has also floated the idea that claims could eventually expire, either 45 years after an asset became payable, or once the owner would have turned 110, a proposal aimed at giving the system a practical endpoint, but one that raises its own questions about an individual’s ongoing right to money that is legally theirs.

The paper poses eight formal questions to industry stakeholders, with written comment due by 19 September. It is, by design, an early-stage document – more a statement of direction than a finished blueprint – and the response it receives over the coming weeks will shape how, and whether, this idea moves forward.

An industry perspective

Ashendran Padayachee, Head of Legal and Compliance at Momentum Corporate, has been closely involved in formulating industry commentary on the proposal. Unclaimed benefits, he explains, are the result of poor member data quality, incomplete employer records, and cross-border migration, along with an industry-wide weakness in maintaining up-to-date contact details for clients over time. “As an industry we talk about serving clients from cradle to grave without necessarily having the data infrastructure to back that ambition up over a product’s full lifecycle,” he says.

Does Treasury’s paper accurately reflects the reality of tracing beneficiaries in South Africa – a market with its own unique mix of informal settlements, incomplete records, and mobile populations?

“National Treasury has drawn extensively from international experience,” says Padayachee, noting a tendency for South Africa to import approaches from elsewhere into what is effectively very unique local conditions. On balance, he regards the paper as a reasonable starting point, albeit that it is not as detailed as would be expected with such a complex issue.

Is centralisation the right answer?

Perhaps the most substantial question the paper raises is whether a single centralised administrator is actually necessary to solve the problem – or whether the same outcomes could be achieved by raising standards across the existing, decentralised system.

Padayachee is not convinced by the case for centralisation as it currently stands. “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 implement. There is also the operational risk of concentrating so much data and process in one place to consider: cyber risk, platform failure, and the sheer scale of coordinating a system this large.”

He’s also concerned that the paper is overly focused on managing unclaimed benefits after the fact rather than fixing the systemic failures that create the problem in the first place.

“Centralising the management of unclaimed benefits – irrespective of what technology you implement – is not going to fix the underlying data quality issues that create unclaimed assets.”

The paper suggests that an asset ceases to be claimable after 45 years or when the owner reaches 110. Padayachee believes the 110-age threshold is more defensible than a flat 45-year period cut-off. “Ownership rights are rarely absolute in practice – the law already limits and reallocates property rights in contexts like deceased estates,” he points out.

At the same time, he’s cautious about the uniform 24-month definition of “unclaimed” that currently applies under the Pension Funds Act being applied across very different financial products. “Different financial products have different life cycles,” he says, adding that Treasury’s paper doesn’t yet provide enough detail on how this would work across insurance, banking, and investment products with very different payout triggers.

The elephant in the room

If the state plans to consolidate R88 billion of other people’s money into a single, government-linked custodial structure, it’s reasonable to ask whether the institutions responsible for holding it, safeguarding it, and made responsible for tracking down the rightful owners have earned that level of confidence. South Africa’s recent history with governance and accountability at state-affiliated entities has been, at best, uneven – and for many South Africans, the instinct to be cautious about handing large pools of capital to a new centralised body, however well-intentioned, is not an unreasonable one.

This isn’t necessarily an argument against reform, or a claim that private administrators are inherently more virtuous than public ones – private institutions carry their own risks, incentives and failures, and are also not above scrutiny. But it is a legitimate question that deserves an honest answer as part of this process: does centralising unclaimed assets under a single administrator genuinely solve the tracing and data problems Treasury has identified, or does it simply relocate risk from a fragmented private-sector system to a concentrated, government-linked one – without necessarily improving accountability along the way?

Given the scale of money involved, it’s a question worth Treasury, and the public, sitting with seriously, rather than assuming that centralisation is automatically the safer or better option.

What happens next

With submissions due by 19 September, the coming weeks will determine how much of this proposal survives industry and public scrutiny in its current form. Whatever the outcome, the underlying problem – billions of rands sitting unclaimed, and a system that has struggled for years to reunite that money with its rightful owners – isn’t going away on its own. The debate about the right way to fix it, however, is only just getting started.