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Pension arrears rise to K9.9 billion

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Figures from the Reserve Bank of Malawi (RBM) have shown that although the number of people on pension has increased, most companies are in high arrears on pension remittances.

RBM has said this puts at stake incomes of many at the time of their retirement.

According to RBM Governor, Dalitso Kabambe, as of December 2017, pension contribution arrears stood at K9.9 billion compared to K6.7 billion in 2017.

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“The effect of such arrears is that pension members fail to access their pension benefits, when they retire,” Kabambe said.

RBM statistics show that the number of people on pension grew from 250,000 in December 2017 to 316,578 as of the end of the first quarter of 2018.

Insurance penetration is seen moving from 1.4 percent to 1.5 percent during the same period.

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The pension figures represent a 26.6 percent increase.

Kabambe said the figures are still low, when compared to the 7.6 million adult population in the country.

Kabambe was speaking, when he launched the maiden Pension and Insurance Week recently in Lilongwe.

He said stakeholders need to join hands in raising awareness among the populace of activities within the industry.

“Pension assets have grown tremendously since the enactment of the Pensions Act in 2011.

“Although the number of people on pension is small, the amount of funds accumulated under pension have increased sharply since 2011 from K74 billion to K566 billion thus growing at an average of 34 percent annually.

“This is because these funds are invested in highly profitable investments. About 37 percent is invested in equities on the Malawi Stock Exchange, 33 percent in government securities and the balance of 30 percent in fixed deposits, property and private debt instruments,” Kabambe said.

He further said that currently, the major challenge facing the pensions drive is some institutions failing to put their employees on pension and remit pension contributions to the administrators.

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