Parliament Thursday passed the Pensions Amendment Bill, 2022, which proposes increasing the proportion of pension benefits to be paid as a lump sum at retirement from 40 to 50 percent, among other things.
The bill, which was brought to the House by Finance Minister Sosten Gwengwe, sought to repeal the Pension Act and replace it with a new piece of legislation that will address implementation challenges being faced by the pension sector, enhance coverage of the pension sector and strengthen compliance and supervision over entities operating in the pension sector.
According to Gwengwe, the bill also proposes a reduction of the waiting period on early payment of benefits from six months to three months.
The legislation, if assented to by President Lazarus Chakwera, would see the introduction of early access of a maximum of 50 percent of pension benefits as a lump sum any time within five years to retirement age.
The bill has also proposed stiff penalties for employers that fail to remit pension deductions to fund managers.
The bill proposes a maximum of K150 million penalty and a custodial sentence for offending firms.
Commenting on the bill, DPP spokesperson on Finance Ralph Jooma described Thursday as a “great day for workers” in Malawi.
He said the bill would help pensioners walk out of employment with a decent package which they can use to run businesses after retirement.
UDF president Lilian Patel also spoke highly of the bill.
After party leaders had commented on the bill, lawmakers on both sides of the august House spoke in unison in favour of the bill.
But the lawmakers proposed a hike in the magnitude of the lump sum to be given out from the proposed 50 to 60 percent.
While appreciating the comments from lawmakers, Gwengwe said a higher increase in the lump sum could defeat the whole purpose of having the pensions scheme.
Gwengwe said the remaining 50 percent, which would be given out as annuities, would help pensioners in their old age.
Earlier in the day, the House passed Bill Number 38 of 2022, Roads Authority Amendment, which seeks to increase the number of board members for the Roads Authority from seven to nine. The bill also seeks to increase the number of ex-officio members from two to five.
In addition, the bill seeks to empower the minister responsible for transport to appoint board chairperson and vice chairperson for the Roads Authority.
Currently, directors choose chairperson and vice chairperson among themselves.