Help the poorest access their provident funds

Tip number 2 for the SA government

Below you’ll find another article by Rejane, the BI Director published in the Mail&Guardian newspaper on 14 September 2007.

We at the BI believe that action should be taken as soon as possible on this issue as there are many, many people affected: at least 12 in our village alone. The woman mentioned below has R270,000 in a provident fund waiting for her but she’s given up due to bureaucracy…

  

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Rejane Woodroffe                                                                                                19 September 2007 __________________________________________________________________________________________

Although I work as an economist and portfolio manager in the finance sector, I live in a remote rural area where my husband has, together with the local community, built a backpackers’ lodge.  

This is in the most remote village in the poorest district in South Africa (according to Statistics SA). The village has no running water, no toilets, no road, no clinic, no functioning school and no electricity or government services of any kind.  

Most of the community members are illiterate and speak little or no English. Because we have made this our home and are considered part of the community, we are often asked to help sort out problems, one of the most common being to help retired mineworkers or their widows access their pension funds.  

The problem is a good example of the disparity between our first and second economies. The best way for me to describe the extent of the difficulties of the poorest in our society in accessing their pension funds, is to use an actual example.  

In 2004 a respected member of our community passed away. He had worked for many years at Anglo Platinum’s Amandelbult mine in Rustenberg. The tragedy of his death was magnified by his family’s inability to access any of the money from the provident fund that he diligently put aside to care for them and to which they were entitled. 

His wife, Nothembile (not her real name), a good friend of ours, lives in a mud hut. She’s had to remove her children from school because she can’t pay school fees, she doesn’t have enough money for food and she suffers from chronic epilepsy.  

Why has she not received the money owed to her by the provident fund? The answer to this lies in the disempowering reality of abject poverty and illiteracy. 

After her husband’s death, Nothembile took what papers she had (various payslips and so on) and went to the labour department in Mthatha. There she was given a cheque late last year, which she couldn’t read. She tried to deposit the cheque and was told by the teller that it had “expired”.  

The teller kept the cheque. We have not been able to find out where this cheque was from: possibly the Unemployment Insurance Fund (UIF) or some funeral benefit. She doesn’t know the value of the cheque. The UIF says it has no record of any cheque being paid. She was advised on how to go about applying for the money. Three certified photocopies of the following documents were required: 

  • The deceased’s ID, which she had, so no problem;
  • The death certificate — this involved regular visits to home affairs in Mthatha and Elliotdale (a journey that takes five hours each way and costs R100);
  • Her ID, which she had;
  • Her marriage certificate. Traditional marriages are not registered and she has to get affidavits from various traditional leaders (four hours’ walk away) — a tedious process;
  • Birth certificates for her eight children. All of them were born in her hut and have no birth certificates. With the authorities keen to avoid social grant fraud, it is a difficult process to get birth certificates;
  • Proof of school attendance. This was relatively easy to get, but the kids have since had to drop out;
  • A letter confirming physical and postal address. This again requires a long walk to the chief;
  • A bank account. With the new Fica rules it is difficult to open a bank account if you live where there are no roads and thus no addresses. This requires numerous trips to Mthatha and the chief. She did this, but it turned out to be a savings account instead of an ACB type bank account — even us city-types don’t understand what that’s about. Now she needs to get an ACB account statement — not a savings account statement; and finally
  • An added complication is that the deceased had two wives, which is not uncommon in traditional areas. The second wife also needs to supply documents before either can access the provident fund.

This process is difficult for someone with no money, but it is almost impossible for someone who’s illiterate. Nothembile wandered around Mthatha for days trying to get copies made and then not understanding that every copy had to be certified.  

The police are often busy and refuse to certify on demand: she requires as many as 60 documents certified. Even when she has all the documents, she doesn’t know who to phone and she doesn’t have money to make phone calls. She doesn’t know what “registered mail” is and she will believe pretty much anything anyone in authority tells her.  

If someone from Anglo Platinum said, “Sorry, you’ve taken too long to apply for the provident fund,” she would sadly accept it. It would be the easiest thing in the world to defraud her — which might be what happened when her cheque was rejected at the bank last year.  

Even when Nothembile gets these papers, she can’t read them and won’t know when she has all of them; she’ll probably end up sending the originals too, which will no doubt get lost in the post; she’ll have to phone for the postal address, but she doesn’t know the phone number and can’t write and has no money to phone anyway.  

She’ll almost certainly send only some of the documents and not others, and then no one will be able to contact her to tell her that there are documents outstanding.  

She and many other people in the same position do not understand that they have a right to this money. Nothembile has given up trying to access the money now. 

The solution to her problem is simple: it has to be legislated that all pension and provident funds must get all the required documents from employees while they are still healthy. This should be included as a term in the employee’s employment contract and the fund’s adherence to this rule should be monitored by the Financial Services Board.  

Additionally, Anglo Platinum and other companies that benefit from the migrant labour system need to be proactive when their employees die. Surely someone must have noticed that this money has been sitting unclaimed for three years?  

This is just a glimpse of the gulf between South Africa’s sophisticated first economy and the underdeveloped second economy. If we want to build a bridge between these two, as government has proposed, we need to recognise the extent of this problem and find creative and practical solutions.  __________________________________________________________________________________________ 

Réjane Woodroffe is an economist and head of international portfolio management at Metropolitan Asset Managers and director of the Bulungula Incubator  

View the original article at:  http://www.mg.co.za/articlePage.aspx?articleid=319505&area=/insight/insight__economy__business/