The Reserve Bank of Malawi (RBM) has warned companies that do not remit money deducted from employees to pension administrators that they will be prosecuted.
RBM governor Dalitso Kabambe issued the warning on Monday when the bank was launching the pension and insurance awareness week which will end on May 5.
Kabambe noted that some companies are failing to put their employees on pension scheme while other companies fail to remit the money deducted from their workers.
To address the challenge, the bank intends to meet all companies that are in default in May this year to agree with them on their repayment plan.
Kabambe however warned that the bank will name and shame the defaulters.
“The last action is to prosecute all those that have long outstanding contribution arrears using the pension and insurance act,” he said.
The bank has chosen this week to bring awareness to the general public on pension and insurance.
Kabambe said insurance is vital since it reduces economic losses when a disaster has occurred.
Insurance can cover losses from market fires, poor harvest due to adverse weather conditions and loss of property arising from accidental occurrences.
The RBM governor added that there is an increased number of people on pension this year.
Kabambe said their target was to increase the number from 250,000 at the beginning of the year to 350,000 at end of the year but fortunately they have already reached 316,578 and there is hope that the remaining 33,422 will be introduced before the end of this year.
“Although the number of people on pension is small at 316,578, the amount of funds accumulated under pension has increased quite sharply since 2011 from K74 billon to K566 billion growing at an average of 34 percent annually,” he explained.
In Malawi, the number of individuals with personal life insurance is at 300, 239 against the country’s population of 17 million.