Asisa members unite R22.7bn with policyholders, investors, beneficiaries and heirs

Members of the Association for Savings and Investment South Africa (Asisa) united policyholders, beneficiaries, investors and heirs with unclaimed assets worth R22.7 billion in 2021, Asisa said in a statement.

The assets were held in 77 790 risk policies, savings and investment policies, annuity polices and accounts in collective investment scheme portfolios.

These unclaimed assets should be distinguished from the unclaimed benefits held by retirement funds, which the FSCA estimated at R47bn in its 2020/21 annual report.

Although not all tracing efforts would have resulted in a cash pay-out, it was likely that a large portion of the R22.7bn would have been paid to the legal owners of the assets in 2021, said Asisa senior policy adviser Rosemary Lightbody.

These pay-outs were in addition to last year’s claims and benefit payments of R608bn made by South African life insurers – the highest on record. This means the savings and investment industry injected about R630bn into the economy last year. To put this in perspective, the government’s social development budget for 2022 is R364.4bn.

Lightbody said Asisa members started 2021 with having to trace the legal owners of R32.3bn in unclaimed assets. Tracing efforts reduced this amount by R22.7bn to R9.6bn.

However, Asisa member companies had to classify another R23.8bn of assets across 60 837 policies and investment accounts as unclaimed during 2021 because, despite all efforts, the legal owners had not been found. As a result, unclaimed assets held on behalf of policyholders, beneficiaries, investors and heirs amounted to R33.5bn at the end of December 2021.

Assets do not prescribe

Asisa said its members were committed to honouring valid claims on unclaimed policy benefits and investment proceeds no matter how long it took to trace the policyholders, beneficiaries, investors or heirs.

According to Lightbody, Asisa member companies agreed to waive their rights in terms of the Prescription Act, which would normally allow them to cancel an individual’s right to claim an unpaid amount after three years.

This commitment is outlined in the Asisa Standard on Unclaimed Assets, which guides member companies on how to treat unclaimed assets and encourages the use of enhanced tracing procedures to keep unclaimed assets at a minimum.

The first principle of the Standard on Unclaimed Assets states the following:

  • A customer’s right to an unclaimed asset remains until the claim is paid or the asset returned, regardless of the timeframe.
  • Unclaimed assets should not become the property of the product provider or its shareholders.

The standard does not apply to retirement annuity policies and preservation fund products, which are dealt with in terms of the Pension Funds Act.

The standard is available on Asisa’s website.

What happens to unclaimed assets?

The Standard on Unclaimed Assets encourages member companies to remind customers of their entitlement to assets following trigger events, such as a policy reaching its maturity date, the approval of a risk benefit claim, a communication marked as undelivered, or a customer reaching the age of 80.

Lightbody said it was not always obvious that policyholders or investors have forgotten about their assets, or that heirs and beneficiaries were unaware that they could have a valid claim. For this reason, the standard does not define unclaimed assets, but expects Asisa members to investigate the circumstances and establish what the position actually is.

“When customers reach an advanced age, for example, our members cannot make the assumption that they have died. They may be alive and well and wanting their policies and investments to remain in place, or they may have passed away and their beneficiaries and heirs were unaware that a policy or investment existed.”

The standard also encourages member companies to take appropriate action, such as:

  • Attempting to make telephonic and electronic contact with customers following a trigger event;
  • Attempting to trace customers via internet and social media searches; and
  • Engaging external tracing agencies.

Lightbody said Asisa member companies are required to retain records that allow the tracing process to be audited and verified by the company’s internal compliance and audit functions.

According to the standard, once an Asisa member company concludes that all reasonable efforts to trace the customer, heirs or beneficiaries have been exhausted over three years, the assets may be used for socially responsible investments with commercial returns, such as enterprise supplier development funds.

However, valid claims in respect of those assets will still be met.

For products where the investment risk is carried by the company, the company may invest unclaimed assets as it deems appropriate. Where the customer, heir or beneficiary would carry the investment risk, the company must aim for investment returns in line with reasonable expectations.

The problem with digital records

Lightbody said the electronic transmission and storage of documents and investment contracts often makes it difficult for beneficiaries and heirs to find policies and investments when someone dies.

“Without access to someone’s computer or laptop, it is almost impossible to piece together their financial affairs.”

She said consumers should share a register of policy details, investment accounts and bank accounts with someone they trust, such as a relative, close friend, financial adviser or estate planner. This register should be placed in safekeeping, together with an up-to-date copy of their will.

She also reminded consumers that it is their responsibility to ensure that the relevant financial institutions have their updated contact details and beneficiary nomination forms on record. “This will ensure that assets are paid to the rightful owners when they become due.”

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