The pension sector has recorded a 54.4percent jump in funds to K5.4trillion as at June 2025 from K3.5 trillion in December 2024, Reserve Bank of Malawi (RBM) June 2025 Financial Stability Report shows.
The central bank attributed the increase to strong investment income returns and improved total contributions, which increased by 7.2 percent to K129.5 billion, although pension arrears continue to pile.
Reads the report in part: “Pension contributions continued growing, with total contributions increasing by 7.2 percent to K129.5 billion [June 2024: K120.8 billion].
“The growth was mainly underpinned by a 25 percent increase in pension membership to 772 585 [June 2024: 618 172].”
It, however, noted that investment assets of the sector remained concentrated in listed equities and fixed income securities which account for 85.5 percent of the total, exposing pension funds to market and sovereign risks.
Another concern highlighted in the report is the continued rising of pension arrears which may result in some retiring people either failing to access their pension or getting little.
Further, pension contribution arrears grew to K107 billion from K102.8 billion in December 2024, posing liquidity, credit and funding risks.
According to the report, the rising arrears compromise the ability of pension funds to pay member benefits on time and reduce the potential investment returns members accumulated contributions, further straining public confidence in the pension system.
Meanwhile, the bank said efforts to promote diversification of pension investments to mitigate identified risks are ongoing as it is currently finalising a directive to govern pension asset investments, aimed at reducing investment concentration and market risk.
In an interview, Malawi Congress of Trade Unions (MCTU) president Charles Kumchenga said arrears affect the pension package of workers.
He said: “Employees are losing out their savings when they retire or lose their jobs because pension funds they contributed are not available. We have a lot of policies on pensions, but one wonders why the same is not being implemented.
“By not remitting the pensions, employers are committing a criminal offence because they deduct the funds from employees, but fail to remit to pension fund administrators.”
Employers Consultative Association of Malawi executive director George Khaki, while indicating that the development is a reflection of the economic environment where employers are not generating enough revenues to meet their obligations, said many are striving to abide by the law.
“In any case, we encourage employers that have challenges to discuss with their workers and the regulator and agree on a plan to make good of their peculiar situations,” he said.
Earlier, money market analyst Kondwani Makwakwa said the arrears are not only eroding worker confidence, but also weakening the ability of funds to mobilise capital.
RBM Governor Macdonald Mafuta-Mwale earlier said the country needs to utilise pension savings to transform the economy, adding that the central bank will work with the industry to diversify investments in the real sector.
The Pension Act 2023 rolled out in March 2023, replacing the Pension Act 2011. The new law has reformed several areas, including governance of pension funds, early access of benefits, benefit design and administration.
