Pension Act finally comes into operation
Minister of Finance Sosten Gwengwe has certified March 1, 2023, as the date the Pension Act comes into operation.
In a government notice dated March 2, 2023 Gwengwe said this was done in accordance with powers conferred to him as the Minister of Finance.
“In exercise of the powers conferred by section 1 of the Pension A t, 2023 I Sosten Gwengwe Minister of Finance appoint 1st March, 2023 as the date on which the Act shall come into operation,” reads the notice.
In an interview, Gwengwe confirmed issuing the notice.
Malawi Congress of Trade Unions (MCTU) Secretary General Madaliso Njolomole was not immediately available for a comment but had earlier commended some of the amendments in the Act.
Opposition lawmakers supported the Act, with Democratic Progressive Party MP Ralph Jooma describing it as “a very important one” for Malawi.
“We are nullifying the current pension regime and replacing it with a regime that even us, in the opposition, believe is a better law,” Jooma said.
He admitted that the new law might not address everything, but that it had tackled challenges experienced.
United Democratic Front spokesperson on the bill Lilian Patel emphasised that Malawians have been waiting for such a law for a long time.
The Act, which was amended 2023
in December last year, has reduced employees’ waiting period for proceeds from six months to three months and allows one to claim 50 percent of total contributions within five years to retirement age.
It also provides for increasing the proportion of pension benefits to be paid as a lump sum at retirement from 40 to 50 percent.
The amended Act also provides for the establishment of a National Pension Scheme for mandatory and voluntary participation.
However, the new law has maintained clauses in the previous Act that compels every employer to put every employee on a pension scheme and that each employee contributes five percent of earnings while employers put in 10 percent, totaling 15 percent.
Employees have been lobbying for changes in the Pension Act to enable them to access a bigger share.