Personal Finance: You might have unclaimed money in a retirement fund or other investment

Stephen Grootes (0:00)

The Money Show, Personal Finance with Warren Ingram.

23 minutes now to eight at the time. A reminder, Warren Ingram is a certified financial planner at Galileo Capital. Tonight, we're talking about money that may actually belong to you, but has been unclaimed. Could be in a retirement fund, could be somewhere else. Warren, good evening. This is one of those conversations everyone wants to have. We all think it might be us. What kind of money are we talking about?

Warren Ingram (0:27)

It could be someone's lucky day if they're listening to this, Stephen, and they take action.

The reason it's worth spending our time on this is because it's really big money. So just in retirement funds, so this would be RAs, pension funds, provident funds, preservation funds. We're talking about a bit more than 50 billion rand, and it's somewhere around 4.3 million people are affected. So that's just the one side. The other side would be things like dormant bank accounts, unit trusts, life assurance policies, and that you're adding probably another 40 billion. So we're getting to a total of around about 90 billion rands worth of unclaimed assets that belong to South Africans that are sitting dormant and ready to be distributed to the legal owners.

Stephen Grootes (1:22)

Just before we go any further, the people who are controlling where this money is now must be in a bank account somewhere. Does no one try and work out who it belongs to?

Warren Ingram (1:33)

They do, and certainly, if it is made, I think a lot of the critique is that maybe there isn't enough if it made and more can be done. But Stephen, if you go through processes like people changing addresses frequently or canceling cell phones without updating information, getting married or remarried again, that very quickly the administration involved here can get overwhelmed. So I think it's one of those that people are doing something about it, and it's a valid point to say they can do a lot more.

And then maybe just a real big lack of awareness on the part of South African public, I guess that maybe we don't know about this.

Stephen Grootes (2:20)

Okay. Your question is for Warren. Don't forget, 011-AA30702-021-4460567, and of course, voice notes on 072702-1702.

Okay. So the money can go missing in all sorts of different ways. What are some of the more common ways? You might move house and lose the paperwork, but where did the money go? I imagine part of this is when you change jobs or something like that.

Warren Ingram (2:46)

Yeah. So very often people, especially if it was a bad breakup with your employer, you get fired or you leave in a half, and then the HR department are a bit slow, and they send you the paperwork two or three months later, and you're trying to find a job or you're in your new life, and it's something you're going to get to one day, and all of a sudden, years pass, and so you've got this retirement money sitting at your old employer, and it's in a retirement fund in your name, but kind of trundling along. It often happens with younger people who were early in their career. So when they were young in life and young in their jobs, that they moved and they thought, well, it's like three or four thousand round, who cares? It's so little money, I'm going to carry on.

And 20, 30 years later, it's compounded to a very meaningful amount. So very often, that will be the case. And I know lots of people would be listening and going, well, I'd never do that, but 4.3 million people are affected, and many, many of them have done that very thing.

So I think that's one, Stephen. And the other one will be you leave your employer, and as you leave, a little bit of money gets paid out in the form of dividends or interest from bond investments that were in the fund. And let's say you get paid out at the end of October, and some of these only pay out at the end of November or the middle of January. And because they're dividends, dividends don't get paid frequently. It could be money that was due to you and then has been sitting there again for a period of time and starting to compound in your favor.

Stephen Grootes (4:33)

I suppose the other one is that if you get a retrenchment payout, the money may not have arrived to you somehow or something like that, although your employer closed down and you don't know where the money went after that and you just walked away from it because you had to cut your losses or that was what you felt at the time.