The Reserve Bank of Malawi (RBM) says consumer complaints against the pensions sector continue to rise, claiming the highest number of cases lodged to the registrar of financial institutions.
In its Financial Institutions Supervision Report issued yesterday, RBM says it handled 457 complaints in the financial sector, with 190 complaints registered in the pension sector, representing 41 percent.
Reads the report in part: “In the pension sector, 145 complaints related to non-remittance of pension contributions while 12 were for non-placement on pension by employers.
“Eight complaints emanated from employers refusing to facilitate payment of pension benefits and the rest were complaints on underpayments and requests for discretionary approvals to access all pension benefits.”
In an interview yesterday, Employers Consultative Association of Malawi executive director George Khaki admitted that employers are struggling with liquidity due to the economic environment, resulting in employers not generating enough revenue to meet their obligations, including pensions.
He said employers are finding it hard to balance, but when revenues improve they are prioritising paying current pension obligations and pension arrears.
“If any pension payment is due, companies scrounge for resources to pay off the maturing pension dues,” he said.
On his part, Malawi Congress of Trade Unions president Charles Kumchenga said employees are losing their savings as a result of employers’ failure to remit pension funds.
“By not remitting the pensions, the employers are committing a criminal offense because they deduct the funds from employees which is reflected on monthly pay slips, but fail to remit the same to pension fund administrators,” he said.
Meanwhile, RBM data shows that K31.1 billion in pension contribution arrears were still outstanding as of June this year, a jump from K23 billion reported in December 2022.
RBM spokesperson Mark Lungu was yet to respond to a questionnaire yesterday, but RBM Governor Wilson Banda is quoted in the analysis as having said that the central bank will continue to undertake various financial literacy initiatives aimed at bolstering financial consumer awareness.