Some institutions in the country have asked for thorough consultations before the Pension Amendment Act is tabled in Parliament.
The entities include the Reserve Bank of Malawi (RBM), Employers Consultative Association of Malawi (Ecam) and Life Insurance and Pension Association of Malawi (Lipam).
A motion to table the amendment as a Private Member Bill for a review of the law was passed in Parliament last week.
Speaking at the opening of the Pension Awareness Week in Lilongwe, RBM Governor Wilson Banda said everyone needed to prepare for retirement.
“Industry players advise us that it is not advisable that those levels of withdrawals should be done because we are trying to protect a pensioner in his old age; so, if they take a substantial amount at this stage, then nothing remains when retire,” he said.
The proposed revised law suggests that the period to access pension funds once someone has lost their job should be reduced to three months from six and that people should be paid 60 percent of contributions from the current 40 percent.
Lipam President Stain Singo said the amendments would have a negative impact on the economy as the country will end up with many pensioners who cannot sustain themselves but depend on government support.
He added that claiming the lump sum in few months would limit the investments pension administrators make with the contributions, which will in turn limit profits they make.
Ecam President Baxton Kayuni shared the sentiments, describing the amendment as a catalyst of disaster.
“We have discussed and agreed on issues for an amendment which is in draft stage but then, all of a sudden, we get another paper in parliament; so, we find that as unacceptable,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.