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‘Pension saved me from Covid’

CHILUZI—It is not a retirement thing

SINGO—It grows the economy

Until August 2020, Flyson Misongwe, 43, was working for one of the gas supplying companies in the country.

Misongwe says the termination of his job came at a time he was not expecting it and his family of three children and a wife was already struggling from economic hardships emanating from the Covid pandemic.

By the time, he had worked for the company for five years and was contributing to the Pension fund through Old Mutual.

According to the pensions Act, a person who has lost a job and has been jobless for six months, is given money which consists of his contributions to the funds and its gross while leaving his former employer’s contributions and gross.

“No one expects to lose their job. I had no choice but to engage in debt in a bid to sustain my family whose economic status was already in shambles amid the pandemic,” he narrated sadly.

The Covid pandemic has shook economies sending them staggering and the knock-on effect has not spared the private and public sectors.

One of the notable effects has been loss of jobs in sectors such as tourism and hospitality, transportation and entertainment.

Misongwe walked door to door with a CV searching for a job, to no avail as different sectors were laying off staff.

Misongwe explained that he survived on debt and help from friends and family but his life completely changed.

In March this year, he smiled at last when he got his pension funds amounting to K6.7 million.

“I was very happy and this is what was also giving me confidence when I was borrowing because I knew that, one day, I would have the money. I paid all the people I owed money, brought my life together and started a business,” he said.

While Misongwe is now still searching for a job, he is happily running a business all hail to his pension funds while the contributions made by his former employer and their gross are also remaining with his pension manager where he will start from once he secures another job.

Pension works in three dimensions which are generation, management and protection of money and the most embraced dimension is the growth of the money which is readily available.

Administrators target to grow the money and beat inflation levels of a particular period then the money enjoys the compound interest which translates that when pension fund managers invest the money, it accumulates bonuses given to people.

Apart from enjoying bonuses, the money also enjoys guarantee of security and some pension managers call it the guaranteed fund because if the money was in the hands of people and not pension fund managers, they would make risky investments or even spend it.

Old Mutual Financial Education Specialist Bernard Chiluzi says many people think of pension as money which will help people when they are old and have retired, which is wrong.

“That money even helps a person when he or she is incapacitated that they can no longer work due to health conditions and apart from that, there is also group life cover which is huge money given to people whose caretaker has died,” he said.

Life Insurance and Pension Association of Malawi (LIPAM) President Stain Singo said apart from benefiting individuals such as Misongwe, the pension industry is also a great investment that spur the development of the country.

Singo said industry is sitting on assets available for investment above K1 trillion which can help to start and grow businesses.

“The industry has got the resources to buy shares on the capital market thus making available money that can be used for development of the country and as long as an investment meets the taste of security and maximum return, funds are available which people can access to start projects which can aid the development of the country,” he said.

It is, therefore, clear that the pension industry in the country has huge social and economic benefit to both individuals and the country at large.

The benefits include long term and short term for both the person with pension funds and those who depend on him.

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