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Reserve Bank of Malawi gets tough on pension defaulters

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CHIMA—There has been an outcry

The Reserve Bank of Malawi (RBM) has reaffirmed its 21-day ultimatum for companies and institutions with pension funds arrears to remit or face a legal action.

The central bank has finished investigations into the pension arrears default rate and reasons.

Their investigation, which was completed last week, saw officials from RBM and Fiscal Police visiting institutions reported to have not been settling their dues.

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RBM Chief Examiner for Non Prudential Compliance Pension and Insurance Supervision Paul Nyirenda said most firms attribute non-settling of the arrears to effects of the Covid pandemic on business.

He said only a few have responded by outlining payment plans.

“There are other employers who would have preferred to default and then channel their resources elsewhere,” Nyirenda said.

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One of the pension fund managers, Nico Pension, hailed the central bank for taking a bold stance to ensure that companies meet their pension contribution obligation.

Nico Pension General Manager Gerald Chima said steps taken would see a rise in pension contributions.

“When it goes to court and they [the defaulters] see that there is a court judgement, they will have to comply. There is no other way,” Chima said.

Cumulative pension arrears rose to K26.9 billion where about 999 out of 3,073 institutions across the country were failing to remit pension contributions despite deducting money from their employees.

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