Members of Parliament Thursday agreed to table two private bills—raising the possibility of amending the Pension Act and the Financial Services Act— in motions that were moved by Likoma Island and Dowa West parliamentarians.
The two parliamentarians, Ashems Songwe for Likoma Island and Abel Kayembe for Dowa West, utilised Private Member Day, Thursday, to ask the august House to table the two bills that seek to amend the Pension Act to allow employees to access their money as well as limit interest rate charges.
First to move the motion was Songwe, who asked Parliament to review the Pension Act. If amended, employees would be accessing their pension immediately after contract termination or retirement.
Songwe moved a motion for the House to allow him to bring the bill to the floor, getting a green light from lawmakers almost immediately.
In his submission, Songwe suggested that an employee should be able to access his pension package upon retirement, even before reaching the age of 60, and also that the pension package should be accessed if the employee has five years or less to retirement.
His motion was seconded by Mangochi Monkey Bay lawmaker Ralph Jooma, who said people were struggling financially after retiring from work.
Jooma said this is because such people did not receive the lump sum of their pension but that their money, amounting to over K1 trillion, was with commercial banks under a pension fund.
Songwe further suggested that the Act should increase the lump sum payout by the pension administrator upon retirement from the current 40 percent to 70 percent.
He also argued that the current setting, in which a person is only allowed to access his pension benefits upon reaching 60 years of age, leaves people in desperate situations financially.
Leader of the House Richard Chimwendo Banda said he supported the move to bring the bill into the house.
He said the process of passing the bill would include consultations with stakeholders, notably the Malawi Congress of Trade Unions and Economic Association of Malawi.
And, then, Dowa West parliamentarian Kayembe moved the motion to allow him to bring on the floor the amendment of the Financial Services Act that would focus on regulating interest rates on loans by introducing interest capping.
Kayembe said financial lending institutions in the country continued to charge exorbitant interest rates on principal loans obtained from commercial banks.
The legislator said this was leading to cases where some citizens were losing their assets and being declared bankrupt after failing to service loans because the rates were high.
He, therefore, asked Parliament to allow him to table a private member’s bill to amend the Financial Service Act so that regulators could now be able to act on interest rates on loans.
“The banks in Malawi are killing a lot of people through exorbitant interest rates. The people can’t afford to have some disposable income for medical health or send children to school. This is simply because of these exorbitant and irritating rates. So I am very convinced that this motion may pass and go into a bill stage,” he said.
Chikwawa North lawmaker Owen Chomanika supported the motion but warned that there were countries that introduced interests capping only to reverse the decision after a few years.
The legislator, therefore, emphasised that the factors that led other countries to reverse their decisions needed to be looked into first to avoid the same happening to Malawi.
Mathews Kasanda is a journalist who holds a Bachelor of Arts in Journalism from University of Malawi (The Polytechnic).
In 2015, Media Institute of Southern Africa awarded him the Best Print Media Education Journalist of the Year accolade.
He joined Times Group Newsroom in September 2019.