National Bank of Malawi Pensions Administration Limited says it is banking on the review of the Pensions Act 2010 for the development of the sector.
The firm’s chief executive officer William Mabulekesi said this on Wednesday in Blantyre on the sidelines of a pension workshop the firm organised for its clients and potential clients.
He said that as a player in the pension industry, they hope for the financial regulator to review some of the sticky issues in the Pension Act, which have been a concern for members of various pension funds.
Said Mabulekesi: “We have sticky issues in the Pension Act which need to be reviewed. Some of the issues include arrears and payouts after retirement.
“There is also an issue of delays in terms of members who have exited employment getting 40 percent of their benefits while the 60 percent is left with the pension fund.
“The issue is very sticky because it is members who lose out because their money is frozen. We hope that authorities will put proper penalties of sanctions for employers to comply.”
He, however, faulted the knowledge gap in the structure of pension schemes in Malawi, including when pension money falls due.
The Registrar of Financial Institutions has the mandate to enforce compliance of the Pension Act, 2010.
Section 61 of the Pension Act 2010 requires employers to remit to a trustee of a pension fund both employer and employee pension contributions within 14 days from the end of the month the contributions fall due.
Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe, in his capacity as registrar of financial institutions, in August published names of 610 private firms that have not been remitting pension funds deductions from their employees to force them to remit.
In an accompanying statement, he said the central bank is concerned with the non-remittance of pension contributions as it negatively affects the accumulation of retirement savings for pension members.
Earlier, Malawi Congress of Trade Unions (MCTU), an umbrella body of workers in the country, also threatened to drag employers to court if they continue not to comply with the Pension Act by not remitting pension funds to administrators.
The Pension Act makes pension funds remittances mandatory and under it, employers are mandated to enroll their employees on a pension scheme.
Employees are expected to contribute a minimum of five percent while employers are mandated to remit 10 percent of the employees’ monthly gross salary which adds up to 15 percent monthly.