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| Business |
| New law for post-retirement |
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by
Aubrey Mchulu, 25 January 2007
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07:20:55
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Stakeholders in the labour industry have drafted the Retirement Funds Bill of 2007 whose key objective is to make a provision that enhances good management of retirement funds and ensure post-retirement income support.
According to the draft Retirement Funds Bill of 2007—whose copy we has sourced, the proposed law will also make a provision for the supervision and regulation of pension and provident funds, among other things.
In Section 53, the draft law also restricts use of a pension fund member’s contributions, entitlements or benefits from a retirement fund in respect of payment for any debt or claim.
“Except as provided by this Act, a member’s entitlement to benefits in a pension fund is not capable of being assigned or transferred, or pledged or charged or otherwise being in subject to security interest [however described],” adds Section 55 of the proposed law.
In an October 24, 2006 executive summary for the ‘Policy Paper on National Pension Reform in Malawi’, consultants said the introduction of a mandatory national pension scheme offers Malawi the prospect of improved security for its retirees, as well as an increase in savings, capital accumulation and economic growth.
But the consultants further noted that while the prospects sound enticing, the process has short-term pitfalls.
Speaking during a long service award ceremony last month, Carlsberg Malawi Brewery Limited/Southern Bottlers human resources manager Sabiti Saidi said it is important for all employees to seriously consider planning for their retirement as soon as they sign employment contracts.
He said there have been cases of staff who have had no decent shelter even after retirement.
Sabiti then urged all workers to develop an interest in understanding provisions of the new law which will exclusively cater for retirement benefits.
“Withdraws will be restrictive hence a requirement for [all workers] to have other savings fund options,” he said.
Sabiti was apparently referring to the present arrangement whereby when an employee leaves a company to join another, the worker cashes pension contributions from the previous employers and starts afresh at the new firm.
Put lightly, the new law proposes that such contributions be left in the pension funds and only be cashed on retirement.
Commenting on the draft Retirement Funds Bill of 2007, the Employers Consultative Association of Malawi (Ecam)—one of the stakeholders in the labour industry—confirmed the existence of the draft law on Tuesday.
Ecam executive director Vincent Sinjani said in an interview the proposed law will help improve the welfare of workers after retirement.
“From employers’ point of view, principally, pension funds have to be preserved because they are supposed to act as one’s income after retirement when it is usually difficult to fend for oneself,” he said.
Sinjani also said the law will make pension schemes mandatory unlike in the present scenario where pensions were being provided more at the initiative of employers.
On the provision that pension funds should not be used as collateral for loans including house schemes, Sinjani said that is a welcome development because attaching such funds as collateral distorts the investment.
No comment could be sourced from the Malawi Congress of Trade Unions—the umbrella body for workers—as secretary-general Austin Kalimanjira’s mobile phone was out of reach while the ground line at the secretariat went unanswered.
Malawi’s pensions industry has assets in excess of K24 billion.
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