Parliament yesterday passed the Pensions Amendment Bill which, among others, provides for increasing the proportion of pension benefits to be paid as a lump sum at retirement from 40 to 50 percent.
The bill also seeks to repeal the Pensions Act and replace it with a new piece of legislation.
The new law—if assented to by President Lazarus Chakwera—will reportedly address current implementation challenges in the pension sector, enhance coverage of the pension sector and strengthen compliance and supervision over entities operating in the pension sector.
The bill also provides for a reduction of the waiting period on early payment of benefits from six months to three months.
Speaking after passing of the bill, Leader of the House Richard Chimwendo Banda said the bill is a very good bill, very progressive bill and the Malawi Government has taken a big step to bring the bill as it serves a lot of Malawians.
“This is a great day for Malawians especially people that are working, those that are about to retire those that lost their jobs and they really to want to get their money which their employers and themselves contributed. Among other things the waiting points have been reduced from 6 months to 3 months instead of 3 months you can get your money 50 percent of the employers contribution and your contribution after 3 months. The other important element is that 5 years before your retirement you can also apply to get your 50 percent of your money both the employers contribution and your contribution, the other important issue is that the money that you take in the current law now is 40 percent but in the new law is 50 percent.
“The other issue which is also very important is that there are those employers who have been absconding, trying to run away from making contributions to the pensions for their workers they will be fined and penalised so that each and every is forced to come in and pay the contributions, the reason is that when an employer does not pay the money the contribution to the pension funders or pension administrators what it means is that they deny that employer an opportunity to get interest on the money because any money that an employer or employee pays to the administrator it earns interest at the end of the day,” explained Chimwendo.
Both United Democratic Front (UDF) and Democratic Progressive Party (DPP) supported the bill and agreed on the importance of the Pensions Bill.
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