THE CEDAR UNCLAIMED BENEFIT PRESERVATION FUNDS
Cedar has registered the "Cedar Unclaimed Benefit Preservation Fund (Provident Section)" and the "Cedar Unclaimed Benefit Preservation Fund (Pension Section)" into which other funds may transfer former members whose benefits have not been claimed. The benefits of this are wide-ranging and will positively affect both the active members on the fund and former members with outstanding claims.
Currently, unclaimed benefits are housed in a money market portfolio within the fund. This unclaimed amount is not only increased solely by bank interest, but is constantly eroded by fund costs such as annual financial audits and valuation fees. Low investment returns and higher administrative costs severely deplete the benefit and, in many cases, the benefit is completely depleted before a beneficiary can be traced. The Cedar Unclaimed Benefit Preservation Funds can increase the chances of tracing a beneficiary and paying out the benefit thereafter, since the Funds have dedicated resources allocated to tracing these beneficiaries.
Under these separate funds, unclaimed benefits can be invested in a portfolio that earns market related investment returns. It is then fairly simple to implement a daily unitized investment model to this money, which allows the growth of the benefit to be closely monitored. The costs of running an unclaimed benefit fund will also be lower because of its financial simplicity audits and financial valuations will be less complex and therefore incur lower costs. The knock-on effect will be a decrease in the rate of erosion on these benefits.
Former members will also be able to find their outstanding benefit something that is not easily done if there have been several Section 14 transfers from fund to fund. In this instance, advertising, information given by the employer on a former member's enquiry, and contacting the Financial Services Board, will result in such person being directed to the Cedar Unclaimed Benefit Preservation Funds through Cedar's call centre. This call centre will be advertised as the first contact for people who have outstanding benefits. A separate administration team has been set up to deal solely with the tracing and paying out of unclaimed benefits.
The Cedar Unclaimed Benefit Preservation Funds can also positively affect funds that have members transferring via Section 14. Transfers into a fund will be completely free of unclaimed benefits the active members will be transferred to the active fund vi Section 14 and the unclaimed benefit members will transfer to Cedar's unclaimed benefit funds via recognition of transfer. Because any transfers will be simpler, this should improve the turn around time of the Section 14 process with the Financial Services Board.
On any merger or acquisition, the fund membership is transferred from one fund to the next and the transferee fund is faced with the problem of having to deal with the unclaimed benefits. The higher the volume of these transfers, the greater the potential number of unclaimed benefits transferred into the fund.
Very often, when members have been transferred from one fund to the next and then again to another, the personal history and information of beneficiaries of unclaimed benefits is lost. With the resources available to an ordinary administrator, this makes tracing these former members almost impossible. By transferring the unclaimed benefits into the Cedar Unclaimed Benefit Preservation Funds, the transferee fund will not be stuck with possibly untraceable unclaimed benefits. The increased time and resources of the designated administration team will also increase the chances of tracing the people due these unclaimed benefits.
Another benefit of having a designated administrator or administration team is that this will decrease the possibility of fraud. The implementation of strict procedures and limited signatories or persons authorized to make payments, will ensure traceability and accountability in all dealings with all unclaimed benefit payments.
The active members on funds cleared of unclaimed benefits will also benefit greatly. Because the fund will have a simpler debit and credit structure, uncomplicated by amounts sitting in bank accounts, the necessary costs for audits and financial valuations should be decreased. There is also always going to be cross-subsidization in retirement fund vehicles and, while active members do not pay the tracing costs for unclaimed benefits, they do contribute towards any additional administration costs. Tracing people who have unclaimed benefits due to them is time-consuming and therefore can incur high administration costs. The Cedar Unclaimed Benefit Preservation Funds will prevent this from occurring.
Therefore, in light of the above-listed benefits, Cedar Employee Benefits and Consultants has set up the Cedar Unclaimed Benefit Preservation Funds (Pension and Provident Sections) with effect from 01 September 2008.
Unclaimed Benefit Fund
Retirement Annuity Fund
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