Pension law not in force
By Wezzie Gausi:
The Ministry of Finance has said it is waiting for a signal from the Reserve Bank of Malawi (RBM) on when the new Pensions Act will come into effect.
The Act, which was amended 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.
President Lazarus Chakwera already assented to the amended Act which was also gazetted, but the Ministry of Finance is yet to decide and advise Malawians on when implementation will commence.
Treasury’s Director of Pensions Davie Wirima said in an interview that the ministry will be announcing the dates “soon” after engaging with stakeholders such as RBM on the date of commencement.
“As a ministry, it is not solely up to us to come up with a commencement date. We have to consult RBM first. So we have passed the consultation stage and we are just waiting for RBM to give us the official dates.
“And when the date is given, we will go back to the Ministry of Justice so that the date should be gazetted too before announcing it to the public,” Wirima said.
RBM spokesperson Ralph Tseka was not immediately available for a comment Monday.
But Centre for Social Accountability and Transparency Executive Director Willy Kambwandira has called on RBM to work with speed in coming up with the dates.
“People have been waiting for this law for some time now,” Kambwandira said.
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 which compel every employer to put every employee on pension scheme and that each employee contributes five percent of earnings while employers put in 10 percent, totalling 15 percent.
Employees have been lobbying for changes in the Pension Act to enable them to access a bigger share.
During one of the consultation sessions, some people pushed for an increase in the lump-sum access from 40 percent to 70 percent and to allow access before retirement.
The law is reportedly going to address several 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.
The Act received support from both the government and opposition sides, with Democratic Progressive Party member Ralph Jooma describing it as a very important one for Malawi.
“Today, 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.