Non-remittances hit pension funds
Various pension funds are being owed billions of kwachas in arrears from unremi t ted pen s ion deductions and contributions by some employers in the country.
One of the country’s major pension administrators, Old Mutual, has since attributed the problem to the tough economic environment prevailing in the country.
Old Mutual Malawi sales manager for pensions, Grey Teweta, said some companies and organisations that would under normal circumstances remit pension funds are now in arrears.
“They are simply effecting pension deductions on paper because they do not have the necessary cash flow to allow for remittance,” said Tewete.
He, however, advised such companies to fully inform their employees about the situation and declare their financial status to the Reserve Bank of Malawi as the regulator of pension funds s as non-remittance is a breach of the Pensions Act 2010.
“Keeping employees in the dark could spark chaos once they discover that their deductions are not being transferred,” he said.
He said such employers are also required to come up with a plan of how they intend to clear the arrears which should be shared with employees, the pension administrator and the regulator.
Tewete said as a pension administrator, Old Mutual is in regular contact with its clients with whom it discusses about pensions.
And to ensure that employees still get the correct value of their pension savings, Tewete said Old Mutual also calculates interest on unpaid remittances to be met by the employers as they settle outstanding bills.
The Pension Act of 2010 mandates all employers with more than five people on their payroll in Malawi to set up a pension scheme in line with the International Labour Organisation (ILO) Social Security Minimum Standards Convention of 1952.
RBM earlier said both itself as a regulator and the Ministry of Labour have the primary responsibility of enforcing compliance of the Pension Act and that any entity that contravenes regulations or directives is liable to an administrative penalty.
