The Pension Act: Rights and Obligations for Employers and Employees
Explore the key aspects of the Pension Act presented by Paul Nyirenda at the Economics Association of Malawi conference. Learn about the objectives, application, exemptions, rights of employees, and access to pension benefits, aiming to ensure retirement security and national savings for economic growth.
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Presentation Transcript
THE PENSION ACT: RIGHTS OF EMPLOYEES AND OBLIGATIONS OF EMPLOYERS Presented By Paul Nyirenda 2018 Annual Lakeshore Conference and General Meeting of Economics Association of Malawi
PRESENTATIONOUTLINE Objectives of the Pension Act Application of the Pension Act Exemptions Rights of Employees Access to Pension Benefits Obligation of Employers Pension Fund Assets Pension Contribution Arrears Challenges Regulatory Actions RBM
OBJECTIVESOFTHE PENSION ACT every employer provides pension for employees; every employee in Malawi receives retirement benefits when due; Promote the safety, soundness and prudent management of pension funds; and national savings for economic growth and development of the country RBM
APPLICATION All employers and employees in Malawi. contract employment probation and temporary staff RBM
EXEMPTIONS: Monthly salary less than K 10,000 and less than five employees - No longer applicable (below minimum wage) Seasonal workers tenants domestic workers expatriates on valid TEP MPs in their capacity as such The exempted employees and employers are governed under the provisions of the Employment Act RBM
RIGHTSOF EMPLOYEES Choose a pension fund additional voluntary pension contributions Transfer pension benefits without giving reasons. Once in two years Bear costs of transfer but Employer to only bear costs for administration as the employer would have paid in the employer s arrangement. Pension benefits are portable RBM
RIGHTSOF EMPLOYEES Receive fund information: Fund investment strategy; Investment performance and financial position Fees and charges Rights and entitlements of members or beneficiaries under fund rules Receive benefit statements Nominate beneficiaries for death benefits RBM
ACCESSTOPENSIONBENEFITS Retirement Ill health Death Early withdrawal/leaving service of employer RBM
OBLIGATIONOF EMPLOYERS make provision for employees to be on pension scheme provide a life insurance cover contribute a minimum of 10 percent of pensionable emoluments remit contributions 14 days after end of month they are due RBM
PENSION FUNDASSETS: INVESTMENTS Pension Fund Allocation - September 2018 Other Investments 3% Cash 1% Unlisted Private Debt 6% Fixed Deposit 7% Long-term Government Debt 9% Listed equity 38% Short-term Government Debt 25% RBM Property 4% Unlisted equity 7%
PENSION CONTRIBUTION ARREARS 16.00 13.70 14.00 11.70 12.00 9.90 10.00 9.50 9.10 MK B n 8.00 6.00 4.00 2.00 RBM - Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
CHALLENGES Low levels of Pension awareness by employers and employees; Non-placement of staff on pension by employers; Pension contribution arrears by employers; Low level of understanding of penalty interest under Government Notice No. 33; and Low levels of placement of staff on GLA Severance due entitlement contributions CPI Escalation annually RBM
REGULATORY ACTIONS A graduated approach is currently being pursued as follows: Press release to remind all employers of their obligations under the Pension Act; Engage employers in dialogue; Naming and shaming of non complying employers; Imposition of administrative penalties in line with S 75 of the Financial Services Act; Prosecution of non complying employers RBM
CONTACT DETAILS The Director Pension and Insurance Supervision Department Reserve Bank of Malawi 10 Hannover Avenue PO Box 565 Blantyre Tel : 01 820 444 or 01 820 299 Email: pisu@rbm.mw RBM
THANK YOU Questions RBM
