While conceding that some good work has been done in tracing the hundreds, if not thousands of mineworker beneficiaries of pension and provident funds, retirement fund fundi Allan Greenblo waves a large red flag about the seemingly cavalier manner in which it’s often done. In a land fast-becoming known globally for its innovative fraudsters, be they in government or the private sector, simply sending out e-mails to principal officers and fund administrators, containing the personal details of former mineworkers, many suffering mining-induced silicosis and/or TB, could prove the equivalent of colluding in a ‘you’ve won the lottery’ phishing scam. Such is the skill and technical capacity of cyber fraudsters that unless the Financial Services Board (FSB), thinks this one through along the lines that Greenblo suggests, it could open itself up to accusations of cynically ‘just getting the job done’. We’re not talking a couple of million unclaimed rands here and there, but R15 billion in unclaimed benefit funds. That’s a tidy sum whose diligent disbursal should rather take advantage of the willing offers of help from organisations with huge and more secure cyber technology than simply rendering those upon whose backs the very economy of this country was built, vulnerable. To get some idea of what the industry potentially owes its former workers you need go no further than Nelspruit lawyer Richard Spoor’s class action on behalf of 200,000 former mineworkers for ill-health compensation. With R1.1 billion in wins over asbestos mining companies under his belt, (asbestosis claims), a win here would do more than jolt administrators of miner benefit funds into better diligence – it would shake the entire JSE. – Chris Bateman
By Allan Greenblo*
Administrators fear that FSB attempts to get fund payouts into the hands of former mineworkers can backfire.
Undoubtedly with the best will in the world, the Financial Services Board has embarked on an exercise to assist hundreds of former mineworkers obtain their unclaimed benefits from pension and provident funds. Inadvertently, however, the exercise poses a risk that the mineworkers and their funds are defrauded of monies to which the mineworkers are entitled.
This is because, late last year, the FSB distributed to a host of principal officers and fund administrators a spreadsheet containing the full names and ID numbers of the mineworkers and their beneficiaries. Being addressed to groups without regard to the administrators’ custody chains, the FSB’s emails – which contain the essential information for fraudsters – would have been seen by anybody to whom they were forwarded.
That the FSB places responsibility for the prevention of fraud on administrators, in practice it’s problematic because of the ease with which fake ID documents can be obtained. They look genuine either because they’ve been issued through bribery at Home Affairs or produced by master counterfeiters.
When presented to administrators, who themselves are vulnerable to internal fraud, they pay. Administrators report numerous instances of fraud only detected by chance, for instance by real and sham claimants being in their offices at the same time.
Says the FSB: “The funds and/or administrators that we liaise with are required to have proper controls to detect fraudulent claims. The role of the FSB is to direct the member to the relevant fund when there is a benefit due and payable. The fund is required by legislation to ensure that payment is made to the correct person. It collects information to verify and validate that the recipient of the payment is the member on record.”
Easier said than done when the administrator or fund is presented with fraudulent ID. How are they to sift the wheat from the chaff?
The FSB and the administrators are up against it. For its part, the FSB is trying to assist particular fund members who lack the means to make inquiries with the relevant retirement funds. Former mineworkers, spread over southern Africa, are a case in point. But the FSB has little information about them.
For their part, administrators are concerned about the email distribution of the FSB’s limited information. They fear that it can fall into the wrong hands, allowing the wrong people to obtain payouts not rightfully theirs.
It’s estimated that over R15bn is lying in unclaimed benefit funds. Not only because of such magnitude but also because the intended beneficiaries are largely poor, the problem of this money not being properly paid out must be effectively addressed. One administrator proposes creative methods that involve the FSB better using its position for bringing together the public and private-sector parties capable of hammering out a solution.
For example, the database compiled under the act which regulates communications (RICA) contains millions of active cellphone numbers linked to an ID number. If administrators could get their hands on that database, they could easily and cheaply make inroads into finding lost members.
Similarly, many of the 17m people who receive social grants would have unclaimed benefits due to them. Administrators say that they receive no response from requests to the SA Social Security Agency that its biometric information be shared (refer below – Painstaking success).
Another example arises from the potential for cooperation with retail groups. They sit on treasure troves of information, particularly cellphone numbers linked to club cards that are swiped at points of sale; in other words, up-to-date data enabling direct contact.
Rather than sending member lists into the ether, it’s surely preferable that the FSB becomes the catalyst to bang the heads of those who can help.
- Allan Greenblo is editorial director of Today’s Trustee (www.totrust.co.za), a quarterly magazine mainly for principal officers and trustees of retirement funds. You can follow him on twitter @Harrybulldog.
Over the past 25 months the Mines 1970 unclaimed benefits preservation pension and provident funds have improved their combined tracing rate to identify 62% of missing beneficiaries, enabling them to be paid more than R60m. The funds comprise almost 70 000 members across SA, Mozambique, Lesotho, Swaziland, Malawi, Botswana and Zimbabwe.
Sue Fritz, chair of the Mines 1970 funds, says that the improved success rate is due to tracing agents now making in-person visits to the homes of beneficiaries where they’re helped to complete application forms and obtain supporting documents: “This process has helped speed the return of claim forms and their subsequent processing. It has also meant the exclusion of dubious agents who charge exorbitant fees.”
Since 2014, she notes, Alexander Forbes has been assisting the funds with innovative administrative systems to match the tracing initiatives. She also points out that the funds collaborate with others including the Mineworkers provident fund, Sentinel and Amplats in cross-checking one another’s data.
Noteworthy too is that the SA Social Security Agency has helped, in the identification of potential claimants, by the washing of the funds’ data against its database. So it seems that SASSA is not as deaf to cooperation as various administrators have experienced.