Malawi Congress of Trade Unions (MCTU) has written the Reserve Bank of Malawi (RBM) to issue a directive to allow workers retrenched following the impact of the novel coronavirus (Covid-19) to access pension funds.
MCTU secretary general Denis Kalekeni said this will enable the affected workers to use their savings as collateral for accessing loans from commercial banks.
He said workers could not have faced serious financial challenges if a directive was issued to cushion retrenched workers and those on forced leave or partial payments to access their funds or loans from banks.
Said Kalekeni: “The governor should use his discretionary powers as provided in the Pensions Act to allow peopleCovid-19 pandemic access part of their pension funds within two months.
“It would be pointless to save money and then procedures and regulations prevent you from accessing your own money that you worked for.”
The workers’ umbrella body is also pushing, through the RBM, to ensure workers get 60 percent of their savings when they retire
than the current 40 percent take home stipulated in the law.
RBM spokesperson Mbane Ngwira said yesterday they are aware of the demands.
He said the central bank, commercial banks, mobile money companies and micro-finance institutions have put in place measures to help cushion Covid-19 impact.
Ngwira said the financial regulator has been discussing and looking at other sectors such as the pension fund and insurance.
He said: “We could not handle all sectors at once and the decisions are cross-cutting regardless of whether some groups have written us or not.
“I can confirm with you that we concluded consultations and the decision on pension funds and insurance sector measures will be announced within this week.”
The Pension Act 2010 makes pension funds remittances mandatory and under it, employers are mandated to enroll their employees on a pension scheme.
Under the law, employees contribute a minimum of five percent while employers are mandated to remit 10 percent of the employees’ monthly gross salary which aggregates to 15 percent monthly.
However, despite efforts by the central bank to enforce timely remittance of pension contributions, non-remittance of pension funds by employers continues to rise, a situation that has continually dismayed workers.
According to latest RBM figures, total pension contributions amounting to K20.2 billion were outstanding by the end of 2019, a rise from K13.1 billion reported in 2018