Pensions: RBM to name and shame defaulters
The Reserve Bank of Malawi (RBM) has warned that it will name and shame companies that are not remitting pension deductions to fund administrators.
The central bank says this is one way of alerting employees that their employer has been playing with their retirement savings.
In his presentation on the Pension Act 2010 during a business breakfast organised by Employers Consultative Association of Malawi (Ecam) in Blantyre on Friday, RBM chief examiner Kaluso Chihana said they will ensure that every employee receives retirement and supplementary benefits when they retire.
He said: “The Act requires that employers make provisions for every employee to be on pension regardless of type of employment, including those on contract and probation. Employers should also make sure that every employee is covered by a group insurance life cover.
“Employers should remit contributions promptly within 14 days to avoid being penalised. The bank will increase compliance inspections in conjunction with Ministry of Labour, Youth, Sports and Manpower Development in all three regions and we will publish a list of all non-complying employers in the local print media and prosecute them.”
Chihana said there are some challenges in the implementation of the Act such as low levels of awareness by employers and employees, non-placement of employees on pension by employers, non-placement of employees on group life insurance policy and pension contribution arrears by employers.
His warning comes a few months after Nico Life Insurance Company Limited, one of the pension fund managers, complained that some companies are yet to remit about K7.4 billion in pension contributions as of November 2017.
The firm’s chief executive officer Eric Chapola said they receive complaints and inquiries on administration of pension funds and some employers are suing companies over pension issues.
“If these contributions are not with us, the employees that will retire, firstly will get less than they would have received; secondly, they are missing out on investment interest.
“These funds that are with us are invested in various forms so that we maximise on the returns. When people go into retirement, they must at least manage the same lifestyle as when they were working,” he said.
Ecam vice-president Sean Longwe said the association is a relevant stakeholder on many policies and laws, including the Pension Act.
He said: “We have a strict responsibility to stakeholders such as the regulator to ensure compliance. It is our prerogative to continue enhancing the capacity of employers on matters relating to the workplace.
“We have a duty to collect as much information through continuous consultation with members for us to advance issues of interest to the relevant bodies.”
Longwe urged employers to remit pension deductions to avoid penalties.
An official of Medical Aid Society of Malawi (Masm) Lombani Mwandiwanga, said some of the employers are not aware of contents in the Pensions Act; hence, the need for awareness. n
