Govt commits to settle K42.2bn pension arrears

Ministry of Finance has committed to clear a backlog of pension arrears it owes retired civil servants.

In the Mid-Year Budget Review Statement delivered in Parliament on February 26, Minister of Finance Felix Mlusu said following the deletion of government pensioners who did not turn up for the head count exercise, government saved over K400 million from the pension payroll duringthe first half of 2020/2021 fiscal year.

The minister said the same amount is expected to be realised during the second half as no major changes are anticipated to the deleted list and the funds are being used to clear the backlog of pension arrears.

In a written response on Tuesday, Ministry of Finance spokesperson Williams Banda said the K42.2 billion arrears will be paid to 3 303 retired workers who are on the waiting list.

“The arrears are piling up due to voluntary retirement as opposed to mandatory retirement. Workers are retiring early because of health condition and looking for greener pastures,” he said.

Banda said Treasury is monitoring the trends on how best to clear the arrears timely so that workers do not wait longer to get paid after retiring.

Reacting to the development, Civil Service Trade Union general secretary Madalitso Njolomole said most workers are forced to cling to contract work in government due to delays to receive their gratuities.

He said while others have the opportunity to get contract work and afford a decent living, many do not get the opportunity and some have died after failing to afford decent living while waiting for their gratuity.

Njolomole said the majority of civil servants are lowly paid and chances of saving for their retirement are slim; hence, they face life survival pressure.

He said: “People are opting to continue working on contracts in government because they are frustrated with long period of waiting to get paid their pension funds after retirement.”

University of Malawi’s Chancellor College economics professor Ben Kaluwa said the arrears mean resources are locked at a time retired workers desperately need income to sustain their families especially that they would no longer be on salaries.

He said most of the retired workers would also start paying more on healthcare knowing that advances in age bring along health problems.

Said the economist: “That money would have been invested in more productive ways and create much needed jobs. So everyone loses by not giving the retired workers what is due to them.

“There should be deliberate efforts to reduce inequalities so that most Malawians are participating in the economy and generate more revenue through taxes.”

Government has been struggling with ghost workers within its systems as Treasury announced that government carried another head count for all public servants on government payroll.