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Reserve Bank of Malawi gets tough on pension remittance

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By William Kumwembe:

Barely two months after naming and shaming pension defaulting parastatals, the Reserve Bank of Malawi (RBM) has gone a step further and intends to shame private sector players committing a similar crime.

In a statement on Friday, RBM Governor, Dalitso Kabambe, who is also Registrar of Financial Institutions has said his office will publish names of defaulting private sector firms by June 30 2019.

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In order to improve employers’ compliance with Section 61 of the Pension Act, 2010, the Registrar wishes to advise that he will be publishing names of employers from the private sector that have outstanding pension contributions by 30 June 2019.

“Employers are, therefore, advised to clear all outstanding pension contribution arrears before 30 June 2019. The pension contribution arrears should be paid together with a penalty interest of Reserve Bank of Malawi policy rate plus 10 percent per annum for the months the contributions remained outstanding in line with Government Notice No.33- Pension (Interest Rate for Outstanding Employer Contributions) Order 2011,” Kabambe said.

As at December 31 2018, pension default by private and public firms amounted to K10.1 billion.

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The country’s pension assets closed 2018 at K716.5 billion buoyed by contributions and investment income.

Kabambe has since warned employers that have neither placed their employees on the National Pension Scheme nor maintained a life insurance policy for their employees as required under Section 15 of the Pension Act, 2010 that they will be prosecuted when found.

Speaking in an interview Sunday, RBM Director of Communications and Protocal, Mbane Ngwira, said the Central Bank has seen a good reaction from public sector pension defaulting firms since it published their names to shame them.

“Most of them have been coming to pay or to discuss a repayment plan,” Ngwira said.

He added that those firms who continue to default after the naming and shaming exercise risk being dragged to court.

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