Pension scheme membership falls

Phillimon Mhlanga

The Insurance and Pensions Commission (IPEC) says the number of people paying into pension schemes fell by 2 419 to 578 801 in the fourth quarter of 2017 from 581 220 recorded in the previous quarter.

In its latest report released last week, IPEC highlighted that the decrease in membership was mainly due to job losses that accelerated withdrawals from pension plan membership in the reviewed period.

“The pensions industry’s membership decreased from 581 220 as at September 30 2017 to 578 801 as at December 31 2017,” IPEC said adding that: “The decrease in membership was mainly attributable to exits from pension funds.”

Experts told Business Times this week that while job losses in the country have helped to drive down the number of people with pension plans, many companies have also cut costs by eliminating the so called defined benefit plans, which pay the worker a guaranteed income upon retirement, for new employees at least.

The insurance and pensions regulator said there was a 9,66 percent change in the number of active members from 394 140 members as at September 30 2017 to 356 077 members as at December 31 2017.

“The decline in the number of active members was mainly a result of reclassification of members from active to unclaimed benefits by stand-alone pension funds, as well as withdrawal of members from employment,” IPEC said.

IPEC also indicated that the number of pensioners who have not been able to claim their benefits from pension funds has almost doubled to 52 664 in the fourth quarter of last year compared to 23 510 members in the previous quarter.

“On account of the above mentioned reclassification of membership classes, the number of members with unclaimed benefits increased from 23 510 members as at September 30 2017 to 52 664 members as at December 31 2017.”

This has resulted in pension funds holding nearly $30 million in unclaimed benefits, according to official data obtained from IPEC.

IPEC highlighted that this was due to lack of knowledge on the part of pension scheme members and poor record keeping by pension funds themselves or outdated records, which have made it difficult for the pension funds to trace members who should claim these critical benefits they are entitled to.

This means the affected pensioners could be living in poverty yet they have money that they have not claimed from their pension funds for years.

The pensions industry had 1 310 registered private occupational funds during the reviewed period, a decrease of 12 funds from 1 322 reported at the end of September.

IPEC indicated that of the registered funds, insured funds stood at 1 124, self-administered funds accounted for 171 while stand-alone self-administered funds had 15.

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