Mandatory pension scheme worries employers
Employers Consultative Association of Malawi (Ecam) has said it is concerned with the cost of doing business, severance entitlement and mandatory remittances which have been a result of the introduction of pension scheme.
Speaking during the 2014 Top Employers Award at Sunbird Mount Soche in Blantyre on Friday, Ecam president Emmanuel Banda said despite the association fighting for employers’ position in the law, employers have faced numerous challenges.
Specifically, Banda said the challenges include the understanding of entry level employees on how severance entitlement dues were managed in transition and the cost to doing business that the mandatory pension remittances have caused to some businesses.
“While saving for life after employment is a good social security measure, pension schemes have also proved to be viable tools for economic development through investments. The key challenge though is that employers have operated in turbulent economic conditions for the past few years. We nevertheless encourage our members to comply whilst also hoping that the challenges faced are lessons which can’t be avoided but remedied by the regulator,” said Banda.
He noted that in the 2014 Doing Business Report, Malawi received a negative score after enacting the Pension Act 2011.
According to the World Bank’s doing business report, Malawi’s mandatory pension scheme was a negative reform which worsened the country’s doing business.
Earlier, chief executive officer for Nico Life Insurance Company Limited, Osman Karim, said according to the Pension Act, the government is supposed to set a threshold and a ceiling for pensionable emoluments as provided under Section 10 of the Act.
Ministry of Labour and Manpower Development Principal Secretary Patrick Kabambe, speaking during the Top Employers Awards, noted that while Malawi’s performance on the World Bank Doing Business is pitiable, encouraged everyone to do something to reverse the trend.
“I have been reliably informed that in 2014 one variable was added to the ease of doing business assessment, which is labour market regulation. This does suggest that the labour market players such as employers, employees and government as the regulator need to ensure that the promotion of best practices is at the heart of the agenda,” said Kambambe.
After crashing 10 steps in the previous report, in the 2015 ease of doing business Malawi slipped by one rank to 164 out of 189—28 places from being the worst place to do business in the world, sending wrong signals to investors.
