Providence Funds

[Littlebits]

Hi all, Hoping someone can give me some insight to a Provident Fund. Left the company I had been with 18 years ago. Was traced recently to receive Claim by a tracing agent. Can anyone tell me, even though the Provident fund stopped at the time of leaving my emplo, if it earns interest? and more or less at what rate? Thank you.

 

[ABCpt]

It should still have earned interest, but would depend on the fund. No guarantee on this. Also, they probably would have deducted admin fees and a tracing fee.

 

[supersunbird]

Hi all, Hoping someone can give me some insight to a Provident Fund. Left the company I had been with 18 years ago. Was traced recently to receive Claim by a tracing agent. Can anyone tell me, even though the Provident fund stopped at the time of leaving my emplo, if it earns interest? and more or less at what rate? Thank you.

Well, depends on what the underlying fund was invested in. If it was invested in shares it would have received share price growth and dividends. If it was invested in cash (moneymarkets) and bonds it would have received interest.

So yes, it should have grown in the 18 years. We cant tell you how much because we don't know what it was invested in.

Oh, and I assume you mean Provident Fund.

 

[ozoned]

If one of those tracing agents got hold of you it may well be worth your time filling out the forms and going through the motions.
I was contacted for a family member who left for Oz more than 10 years ago, and who left the company concerned in the mid 90's.

I emailed him the tracing agents details (Actually I thought it was a bit dodge and nearly did not bother to let him know)
Turns out he received something like R25 000.

 

[Arthur]

Typically, when you cease employment, your provident fund contributions are put into a provident preservation fund. Find out who manages your fund and get the valuation. It could be at least triple the original value in nominal terms. I have two preservation funds, one 22 years old, the other 17 years.

 

[Rkootknir]

Typically, when you cease employment, your provident fund contributions are put into a provident preservation fund. Find out who manages your fund and get the valuation. It could be at least triple the original value in nominal terms. I have two preservation funds, one 22 years old, the other 17 years.

Not if you don't claim your benefit. If there's no claim the liability remains with the original fund and cannot be transferred to preservation fund. The money becomes an unclaimed benefit in the books of the fund after a certain period of time has elapsed. The fund's trustees may transfer it to an unclaimed benefit fund in terms of section 14 of the Pension Fund's Act but what usually happens is that the benefit remains in the original fund.

Depending on the rules of the fund interest should be added to the unclaimed benefit - it would be very unusual (but possible) if no interest was added. Bear in mind that the interest can be used to pay expenses incurred by the fund in administering the record so if the original amount was small the expenses might have "eaten up" all the interest...

 

[Arthur]

True, of course. I gratuitously assumed his rights had vested and been moved to a preservation fund. An increasing number of pens/prov funds do that for members leaving employment.

 

[iDOL]

Getting into this at the end of it all as I couldn't quite recall all of the lingo/terminology involved.

Well most likely you were contacted either due to one of the following :

Surplus - due to previous funds(pension/provident) holding reserve accounts to allow them to cover costs,expenses or other benefits in the instances of defined benefit funds, where they converted to defined contribution.
Bulking - due to previous funds negotiating better rates for funds held in their bank accounts, the administrators never passed on the better rate and instead pocketed the difference - they are in the process of paying this back to members.
Unclaimed benefits- as detailed in one of the other posts above.



Most likely in the order that I've listed them.