Pension arrears have grown by K5 billion within a year to K27.9 billion by June this year from K22.9 billion, the Reserve Bank of Malawi (RBM) has said.
This was revealed during a luncheon organised by Zamara Pension in Blantyre.
According to RBM Principal Examiner for Pension and Insurance Shamitso Tsonga, the pension arrears have hit that amount while in 2011 there was 100 percent compliance rate.
She added that companies are attributing non-remittance of pension funds to the Covid pandemic especially in the past two years.
“We are issuing administrative penalties to employers that have pension arrears and recently we got guidance from our legal team and we have commenced legal proceedings against 21 employers who were initially served with administrative penalties,” she added.
Despite the developments, the pension sector has registered growth over years, with funds hitting K1.4 trillion by June this year.
It was further revealed that members of the pension sector have grown to 532, 789 by June this year from 73, 837 people 11 years ago.
Zamara Pension Managing Director Ekari Chauluka said non-remittance remains a challenge that has to be addressed from all angles.
Chauluka added that while it is important that there should be compliance in the remittance of pension funds, businesses need to have a conducive environment to spur their economic performance and remit the funds.
“Our plea continues to be that pension contributions should be remitted on time to serve the member because non remittance means that the member will not fully enjoy benefits of the pension which he worked for,” he said.
Employers have been lamenting the volatility of the economy, which has affected performance of most businesses in the country.
The Pension Act 2010 makes pension fund remittances mandatory but our findings show most employers continued to face challenges to remit pension funds.
The pension law dictates that employees contribute a minimum of five percent while employers remit 10 percent of the employees’ monthly gross salary.
Despite indicating to have deducted the pension monies from employers, the money is not remitted to the fund manager.
Employers Consultative Association of Malawi Executive Director George Khaki said Covid pandemic has had an impact on most businesses which are gradually recovering.
He, however, reaffirmed the employers’ commitment towards settling their dues.
“We have been advising employers to engage RBM to discuss if they face difficulties in complying and as an association we are also arranging a meeting with RBM so that we discuss how best we can handle it,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.