Stakeholders have welcomed the decision by the Reserve Bank of Malawi (RBM) to establish a Pensions Compliance and Support Department within the office of the Registrar of Financial Institutions.
The bank announced the development on Wednesday in Lilongwe, saying the new department has been created to support a core priority of ensuring that all employers meet their obligations under the Pension Act 2023 and that all pension contributors are treated fairly and transparently according to the law.
Announcing the development at a media briefing, RBM governor Macdonald Mafuta-Mwale said this is the first step in its quest to set up a robust and effective pension services office to ensure full compliance with the Pension Act 2023 by all stakeholders.
Mafuta-Mwale said the Pension Compliance and Support Department will proactively monitor employer compliance, conduct inspections, investigate cases of delinquency and take corrective or legal action where necessary.
He said: “The Pension Act 2023 empowers the Registrar to take several enforcement actions against non-complying employers that include issuing warning, freezing of assets imposing monetary penalties if up to K100 million and closure of business.”
Meanwhile, the bank says it will start conducting public education campaign in the coming weeks considering that the better informed the public is, the stronger and more sustainable the pension system will be.
Accordi ng to RBM, the Registrar of Financial Inst i t u tions has since designated the NBM Pensions Administration Limited Unrestricted Pension Fund as an interim default fund so that inactive accounts probably of employees that lose or change jobs would be transferred to that fund.
In an interview, Employers Consultative Association of Malawi executive director George Khaki described it as a welcome development that could ensure effective regulation of the Pension sector.
“This is good news because the Pensions Act of 2023 states that there should be compliance and for the bank to enforce compliance, there is need for a sound oversight,” he said.
On his part , Malawi Congress of Trade Unions president Charles Kumchenga commended RBM for the development, saying it will ensure efficiency on tracking and penalising defaulters.
“A very good move by RBM with hope. This will help pensioners to be accessing their pension on time because that department will be concentrating on one thing only.
“However, it should not just be a rubberstamp department. People and departments can be instituted, but if funds are not available it will still be a problem,” Kumchenga said.
This comes at a time the pensions sector dominates financial sector complaints, according to RBM’s recent financial stability reports
