By Duncan Mlanjira
A lot of employees are not adequately informed of how the pension scheme system works and its benefits, a development that is leading to a lot of misinformation through social media.
Thus the country’s leading insurance company, NICO Pension — in partnership with the Reserve Bank of Malawi (RBM) — invited pension trustees and employers to a seminar at Amaryllis Hotel in Blantyre where they were encouraged to provide employers accurate information on the pension system.
NICO Pension’s General Manager Gerald Chima said employers need to be constantly engaging their employers to inculcate that pension is a culture of safeguarding people’s economic well being during their retirement.
“Most employees do not understand that the pension scheme is an alternative investment and it is through the employer that they can gain more confidence to invest more than the required percentage of their earnings,” Chima said.
“We will be engaging more with employers that we should visit their companies and institutions to hold seminars with their employees so that they can learn more on how they can invest to safeguard their tomorrow through the pension scheme.“
He added that there is a misconception that employees are being robbed of their money through this scheme because they do not understand that the financial laws of this country protect their pension investment.
This was also attested by Peter Kambalame, Principal Examiner/Pension Regulation of RBM’s Financial Sector Regulation Department, who said it is the right of employees to be on pension scheme and that it is also their right to contribute more than the percentage they are mandated to by the law.
“Most employees do not realize that they can ask their employer to be deducting from the salaries as voluntary contribution,” Kambalame said.
“They need to be told of the benefits of the voluntary contribution that it shall help them enjoy a blissful retirement knowing they are guaranteed of their economic recovery through fixed monthly withdraws.”
He also said employees also need to know of their life expectancy so that they can make informed decisions on how much more they can investment as voluntary contribution by enlightening them on latest trends of the country’s life expectancy.
According to National Statistical Office’s 2018 Population and Housing Census statistics, life expectancy at birth is at 65 years old, at 40 years it’s at 33 years more, at 50 it’s at 26 years more and at 60 it’s at 19 years more.
If employees were to be furnished with these stats, Kambalame said, they can plan on when to retire and how much to invest more so that their fixed monthly withdraws can ably sustain them throughout their retirement.
He also said the employees need to be informed of the need to continue updating names or contacts of their nominated death beneficiaries (next of kin) saying there had been cases where some nominees could not be traced.
He also told the delegates that employers need to be told of their right that they can move with their pension contributions from one employer to another.
He said pension assets have increased to K1.02 trillion, representing 14.7% of GDP as of September 2020 from K74 billion in 2011.
Quarterly pension contributions is now averaging at K27 billion; pension assets earned investment income of around K99.7 billion while pension members increased to 466,920 in September 2020 from 73,837 in June 2011.
Over 2,995 employers are participating in pension scheme as at September 2020 from under 300 in 2010 and over there are 3,000 minor accounts (section 71 requires that trustees must hold and invest benefits for beneficiaries who are under 18 years of age).
“So far over 17,094 employees have accessed benefits under section 65 in 2020 and cumulatively from June 2011, over 127,929 employees have benefited from early withdrawals,” Kambalame said.
One of the delegates, Keldon Chima from Malamulo Mission in Thyolo, said he found the seminar very enlightening because there were some issues he has learnt that most employees ask about but they fail to give accurate answers to.
“I am now well equipped to confidently clarify most issues that our employees ask and that, where we will fail to do so, then we can contact pension trustees or RBM itself for clarification.
“I must also say that we shall organise that NICO Pension can visit us for a seminar on the same so that Malamulo Mission and the employees are on the same page in as far as pension scheme is concerned,” he said.