RBM names pension defaulters

At least 18 statutory corporations and councils have not been remitting their employees’ pension contributions amounting to a cumulative K5.6 billion for close to six years now.

Major culprits, according to a memo from the Reserve Bank of Malawi (RBM), are Agriculture Development and Marketing Corporation (Admarc) whose arrears are pegged at K1.3 billion, Lilongwe University of Agriculture and Natural Resources (Luanar) at K958.1 million, Malawi Broadcasting Corporation at  K854.5 million, while Blantyre Water Board (BWB) funds for one and a half years have accumulated to K717.6 million.

Ngwira: We engaged them in dialoguein attendance.

The development, which puts thousands of employees in the institutions at risk of losing their money, has since compelled RBM to name and shame them.

As of October 31 2018, at least 46 percent of pension arrears that accumulated over six years were from statutory corporations and councils, a development that negatively affects the accumulation of retirement savings for pension members.

Section 65 of Pensions Act (2011) mandates the Registrar of Financial Institutions to take to court and punish every institution that fails to comply with the Act.

But for some time now, RBM has been engaging the defaulters in dialogue, with little success.

In a press statement yesterday, RBM says it is concerned about the non-remittance of pension contributions and will, therefore, consider further actions to enforce compliance if the statutory bodies do not clear the pension contribution arrears by March 2019.

“Section 61 of the Pension Act 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.

“Employers are, therefore, once again reminded that non-remittance of pension contributions to a pension fund is an offence under the Pension Act,” reads the statement.

In a follow up interview, RBM spokesperson Mbane Ngwira confirmed that the central bank has been on the negotiation table with these companies before resorting to naming and shaming them.

He said: “We started with negotiations for them to honour their obligations, but since it has failed, we have resorted to naming and shaming for their employees to know what is happening.”

According to a communication from the Registrar of Financial Institutions, Admarc has not been remitting its employees’ pension contributions for three years, followed by Luanar for 10 months, MBC for about three years while BWB has defaulted for 18 months.

Another water utility company, Northern Region Water Board had its arrears as of October 31, at K535.5 million for two and a half years.

Other statutory corporations with arrears are Central Region Water Board at K189 million for one year, Southern Region Water Board at K148 million for five months and Malawi Posts Corporation at K223.5 million for 11 months.

Mzuzu University did not remit pension deductions amounting to K197.2 million for 10 months, Malawi Institute of Management defaulted for three years and has accumulated K141 million and Malawi Institute of Tourism has K26.8 million in arrears for four years.

Copyright Society of Malawi and Malawi Local Government Associations arrears are the lowest at K5.2 million for about two years and K5.9 million for 11 months respectively.

Five of the country’s councils have also been failing to remit the funds with Blantyre City Council accumulating the highest at K242.7 million for a period of three and half years.

Mzuzu City Council and Nkhata Bay District Council have arrears at K48 million and K10.8 million respectively for non-remittance of six years.

While Mangochi Town Council has K26.3 million in arrears for four years and Lilongwe City Council has K25.7 million for two years.

In an interview yesterday, comptroller of Statutory Corporations Stuart Ligomeka said his office is concerned that employers are not remitting pensions deductions.

“My office is aware of these arrears, but we do not know why chief executive officers are not remitting the funds to administrators,” he said.

In June last year, Ligomeka raised his concerns with CEOs of statutory corporations, alerting them on their arrears and that RBM has been receiving a lot of complaints from retired corporation employees.

It followed a RBM warning in April that it will name and shame companies that are not remitting pension deductions to fund administrators.

In July 2011, Malawi adopted the Pensions Act of 2010 which introduced a mandatory contributory pension scheme to build national savings.

Among others, employees are expected to contribute a minimum rate of five percent while employers chip in 10 percent of the employee’s monthly gross salary.

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