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Government dodges pension law

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A university of Malawi professor of economics, Ben Kalua, has faulted government for dillydallying in implementing the amended Pensions Bill of 2011 which Parliament passed last year, saying the development will continue stifling investment progress.

Parliament passed the bill which makes it mandatory for all employers including government to remit their employees’ pensions to pension administrators, but up to now, government has not yet started adhering to the requirement.

Early last year, Ministry of Finance spokesperson Nations Msowoya said government would soon establish a pension board which would recruit an administrator as the law requires, but over a year later, the dream remains in the pipeline.

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And according to Kalua, this is not on because pension schemes are critical in economic development since retirees enter the investments sector if their pension schemes are properly managed.

Currently, pensioners receive their money from the Accountant General, and this implies that interests which would be accumulated if the funds were remitted to pension administrators are not available.

In an interview yesterday, Kalua said there are countries in the world that have tremendously improved in so far as investment is concerned because of pension schemes.

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“Failure to remit pensions to administrators is one very serious problem that this country is grappling with. The pension sector of the economy is very important because it mobilises significant economic developments.

“Scotland is not a major economy but it is renowned for its pension sector which is very robust and this translates into a robust investment sector. So adherence to the requirements of pension schemes is very key to economic development in countries like Malawi,” Kalua said.

He added that it is dangerous for the pension budget to be relying on recurrent expenditures as this implies the pension sector cannot grow.

Asked why government is failing to implement the Pensions Act where government is mandated to remit funds to pension administrators, Msowoya simply said it is because there is no money.

Meanwhile, a Chancellor College professor of law, Edge Kanyongolo, has said while it is not unusual for an act of parliament to take long to be implemented, such delay can have negative consequences

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