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Unclaimed Benefits Fund

Sanlam’s Unclaimed Benefits Pension Preservation and Provident Preservation Funds offer a specialised solution for unclaimed benefits.

This solution is available to any pension or provident fund’s board of trustees, whose objective is to preserve their fund’s unclaimed benefits in a suitable solution. The solution includes unclaimed benefits accrued in a fund in respect of members, former members, nominees or dependants.

When Is a Benefit Regarded as Unclaimed?

A benefit becomes unclaimed if it is not paid within 24 months after it is legally due and payable to a member. An unclaimed benefit will remain in the retirement fund and may only be transferred to an unclaimed benefit fund if it is not claimed within the 24 month period.

Tracing of Members

The board of trustees of the Funds are responsible for managing and tracing the unclaimed benefits. The board of trustees adopted an official tracing policy with the following features:

  • All fund credits below R1 000 are referred for an ITC trace to obtain contact details for the member. This is done free of charge. Unsuccessful traces are re-referred on a periodic basis.
  • All fund credits above R1 000 are referred to a tracing agent. If the trace is unsuccessful, the member is referred to a second tracing agent.
  • The appointed tracing agents have a comprehensive database and boast a success rate higher than the industry average
  • Quaterly reports are provided to the board of trustees of the Funds, to monitor the rate of successful traces

Minimum Amount

The Funds do not impose a minimum unclaimed fund credit on transfer.

Investment Mandate

Unclaimed benefits transferred to the Funds are invested in the SIM Active Income Fund for no more than two years after commencement and thereafter phased into the SIM +5% (Global) Absolute Return Fund.

The board of trustees may alter this investment strategy from time to time, depending on the market performance and capital available in the Funds.

Income Tax

The Funds may receive pre and post-tax benefits.
Benefits that have been taxed or are exempt from taxation will retain this status. Benefits that were not taxed on transfer will be taxed when claimed.

Sanlam Employee Benefits, as the appointed fund administrator, will issue the annual required IRP5 certificates once the unclaimed members are paid.

Contingency Reserve Account

The contribution (included in the admin fee) to the contingency reserve account is utilized for:

  • Taxes and levies imposed by regulation
  • Premiums for fidelity and professional indemnity insurance for the Funds
  • Fees and reimbursements payable to consultants, advisers and other service providers
  • The cost of audits
  • The remuneration to independent board members of the Funds

Should there be a shortfall in the contingency reserve account, amounts required to settle fees and costs may be recovered from the member records.

Legal Structure

The Unclaimed Benefits Pension Preservation and Provident Preservation Funds are registered in terms of the Pension Funds Act no. 24 of 1956 and were approved by the Financial Services Board (FSB) on 18 February 2009.

The South African Revenue Service (SARS) approved the Funds on 23 April 2010.

Auditors and Actuary

RademeyerWessen Auditors is the Funds’ appointed auditor.

The Funds are currently exempt from actuarial valuation.

Fidelity Cover

Professional indemnity cover is in place to cover possible errors, omissions or fraud committed by the trustees or employees:

  • For the board of trustees: R30 million
  • For the administrator: R950 million

Tracing Agents

Two tracing agents have been appointed:

  • The Data Factory
  • ICTS Tracing Services

Administration

The Funds are administered by Sanlam Employee Benefits, a business unit within Sanlam Life Insurance Limited.

Sanlam Employee Benefits’ administration systems are supplied and supported by MIP Holdings (Pty) Ltd. MIP is a locally developed co-sourced solution specifically designed for the South African pension fund administration market.

MIP-EB and MIP-FINANCIALS are the core modules of the MIP stand-alone system, designed specifically for employee benefits administration. MIP-EB is used to perform member record administration tasks, while MIP-FIN is a fully integrated financial system used for recording all transactions triggered by events in MIP-EB.

The system also integrates with other systems in use, namely:

  • A customer relationship management and workflow application (C-Flow) supported by Front Range Solutions
  • Investment administration software supplied by Microgen Systems and Interlink The Retirement Fund Web where beneficiaries can view their benefit statements

Depletion of Transferred Unclaimed Benefits

The rules of the Funds provide for the individual member account to be:

  • Credited with (amongst others) the fund interest (if positive)
  • Debited with (amongst others) the fund interest (if negative), as well as the relevant administration fees and the contribution to the contingency reserve account

Should these costs exceed the size of the benefit in the fund, the benefit could be depleted.

All depleted member values will be reported on to the FSB each year when the financial statements are submitted.

Application Process

In order to transfer unclaimed benefits into these Funds, the board of trustees of the transfering fund must make a resolution and inform their adminstrator thereof.

Example:

The trustees of the Fund hereby resolve:

  • All benefits (including death benefits) legally payable to members, former members and/or pensioners and that have been unpaid for a period of 24 months from the date on which the benefits became legally due and payable, be it before or after 1 November 2008,
  • be transferred to the Sanlam Unclaimed Benefits Pension Preservation (12/8/37901/1) and/or Provident Preservation Funds (12/8/37902/1), as the case may be, and
  • that the administrator of the Fund be and is hereby authorised on an on-going basis to do all such things and sign all such documents as is necessary to give effect to this resolution

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