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House passes Pensions Amendment Bill

Njobvuyalema: The amendments do not make sense
Njobvuyalema: The amendments do not make sense

Parliament on Wednesday passed the Pensions (amendment) Bill to allow the public service to be exempted from joining the National Pension Fund for an additional two years following the expiry of the exemption in June 2013.

Minister of Finance, Economic Planning and Development Goodall Gondwe tabled the bill, seeking an amendment to Section 2 of the Pensions Act because government was not able to join the fund due to funding problems.

Section 7 of the Pensions Act also provided that the Pension Fund administrator should not manage more than 20 percent of the assets of the civil service scheme.

Gondwe also asked Parliament to amend the Act to allow investment of pension assets outside the country.

“Accumulation of pension savings is increasing and it is starting to affect the return on investments. By investing the pension outside Malawi, we will have access to foreign exchange,” he said.

Since June 2011, when the Pensions Act came into effect, to June 1 2014, pension assets have increased from K59 billion to K206 billion.

The amendment will also soften conditions for pension contributors to access contributions if they remain unemployed for six months, with Gondwe saying “it would not make economic sense to deny a person when the amount was small”.

But Malawi Congress Party (MCP) spokesperson on finance Joseph Njobvuyalema said the amendments did not make sense when there had been bigger complaints from workers on the Pensions Act.

He quashed the amendment of investing the fund outside Malawi and the replacement of Pension Fund Adminstration in Section 7, saying the Act should have just empowered the Adminstrator General to carry out pension activities.

But People’s Party (PP) spokesperson on legal matters Ralph Mhone said his party was in support of the bill as it aimed to iron out technicalities, which had cropped up since the law came into effect.

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