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MANDA—Reducing waiting time will defeat the purpose

Picture this; you work hard each day, get paid at the end of the month, then you give part of your salary to a friend on trust to give you back when need rises.

Your friend takes the money, invests in a high return venture such as capital markets and real estates, make profits and earn a living out of it.

Years pass and you lose your job. You remember that you have some funds somewhere, which might have accumulated to millions; you approach the friend for a share of the money.

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Alas, the friend says you can only access the funds if you remain jobless for six months. Worse still, you cannot get it all; you can access 40 percent only and get the rest at 60 years.

Exhausting right? Well, that is the way the Pension Act 2010 in Malawi is crafted.

Godfrey Pemba, 43, had been working for one of the stationery supplying companies in the country but lost his job when Covid came in full force last year.

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Pemba says, by the time he lost his job, he had worked for the company in a senior position for more than 10 years and his funds had accumulated to millions of Kwacha.

He wanted to invest the money in a business.

“To sustain my life and that of my family during the six months without a job, I had to borrow and I had to borrow a lot. The money finally came but when I repaid the loans what remained was not enough for a simple business so I just went into job searching again,” he said.

Section 64 Subsection 1 points (a) to (e) stipulate when and how the person can access their pension funds’ benefits.

It includes loss of job for six months, death, reaching retirement age, leaving the country, incapacitation due to health problems, and other reasons.

“For any reason otherwise than in circumstances described in section 64 a to e permit the trustee of the fund to pay benefits to the member out of the fund if the registrar is satisfied that a member has not secured another employment for a period of six months,” reads part of the section.

The said benefits paid to the member are limited to that part of the contributions paid by the member, not the employer, and any investment income on these contributions.

These are the thorns which have moved a group of citizens called Pension Act Amendment Movement to gang and start calling for the amendment of the law.

Last year, the group petitioned Parliament for the amendment of the act but it did not see deliberations in the August House.

According to its general secretary Paul Nguluwe, they will push for the deliberations again this year because, according to the movement, the law in its current form is not helping Malawians but only help those in the pension service providing business.

“We are hoping that it will be tabled but if it is not, we might be forced to consider that legal alternatives such as vigils at parliament so that the MPs help the people who sent them to parliament on trust that they will be in parliament to be their servants,” he said.

Apart from the time it takes for someone to access their funds, the movement also wants pensioners to be able to retire at any age and access all their funds to venture into business on top of having benefits accrued to annuities.

The law makes pension contribution mandatory for everyone working in the government or private sector to help people sustain their lives after retirement or incapacitation after noting that people struggle in old age with financial problems.

Life Insurance and Pension Association of Malawi Secretary General Tawonga Manda said, as much as they acknowledge that the waiting time should be reduced, reducing it to a month or below will defeat the purpose of pension because the six months period was put to give ample time to people to search for another employment.

Manda said that pension is for people when they have retired and when people are looking at short time needs, they should remember that the main goal is for the funds to help them when they retire.

“If we give them money and they have landed another job, they will have reduced their retirement plan, thereby defeating the whole purpose of pension as intended by government and other stakeholders,” he said.

Pension is supposed to be of help not a source of pain to pensioners who have already spent their energy at work trying to save up for their life after work.

Government through members of Parliament should, therefore, come in and look at the tears of those who sent them to parliament and help them.

Pension service providers should also put their customers at heart and join the fight to reduce the period because it will also increase their customers base as it will woo many customers.

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