A substantial amount of wealth is either locked away in retirement funds or sits dormant in unclaimed benefits, these assets represent a missed opportunity for economic growth and individual financial empowerment.

Transformation within the Retirement Industry can be the ultimate stimulus to the South African economy. The introduction of the “two-pot” system is the beginning of this transformation.

According to the Special Occasional Bulletin of Economic Notes published by SARB in August 2024, the “two-pot” system is set to release billions into the economy. The publication estimates that if citizens act prudently up to R40 billion is expected to be withdrawn from pension funds by the end of the 4th quarter of 2024. This withdrawal rate is projected to halve and be spread over the full year in 2025 and 2026. This results in South Africans having an additional R31 billion in disposable income for last quarter of 2024 and approximately R16 billion in each of the follow two years.

In parallel with the implementation of the "two-pot" system, the Financial Sector Conduct Authority (FSCA) and National Treasury have once again highlighted the issue of Unclaimed Benefits in South Africa. Reports indicate that Unclaimed Benefits have reached an alarming total of R90 billion, with R48 billion of this amount remaining unclaimed in Pension and Provident Funds owing to a near 4.5 million members.    

These funds constitute a substantial financial resource that, if returned to their rightful owners, could transform lives, provide a significant boost to the economy, and generate millions in tax revenue, much like the "two-pot" system.

Unclaimed benefits refer to funds that belong to individuals which have remained unclaimed, often due to a lack of awareness, outdated contact information or administrative issues. Currently tracing beneficiaries is largely a manual process which is plagued by inefficacies and credibly challenges.  

FinTech startup, Robin Hood in pilot partnership with Standard Bank’s OneHub has developed an innovative solution to reunite citizens with their unclaimed benefits. According to Rowan Gordon, CEO of Robin Hood, “Unclaimed benefits have reached this magnitude due to a lack of investment in technology to deal with both the tracing of individuals and then administrative tasks required to make payments. We have built new digital solutions to solve this societal problem. We look forward to returning money to citizens and benefiting the economy.”

In a nation grappling with poverty and unemployment, unlocking these funds can empower citizens to invest in education, launch businesses, enhance their financial stability, and serve as a catalyst for a stronger, more resilient economy.

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