Pensions backlog down to one month
Malawi Government has reduced the period it takes for new retirees in the public service to access their benefits from 18 months to one month as part of the ongoing public sector reforms.
Treasury has previously attributed the backlog to lack of funds under the pensions and gratuities vote which received K43 billion ($62.7 million) in the 2015/16 National Budget.
The clearing of the backlog follows implementation of pension reforms in which government has adopted a First Retire First Pay (FRPF) principle to clear the backlog of arrears which before July 2015 was 18 months from the date of retirement.
The reforms contained in a document The Nation has seen indicates that with the reforms the Ministry of Finance has started implementing, monthly pension payments immediately an officer retires.
This would be followed by clearance of backlog of pensions and gratuities, payment of current gratuities and finally payment of 50 percent part payment of gratuities.
Ministry of Finance spokesperson Nations Msowoya said the arrears were down to three months by March 2016 and now the period is one month on account of the review of the business practices in the pension department.
He said: “As we speak, immediately people retire they are able to get their pension immediately and their gratuity is the one paid after three months.”
Apart from reducing pensions and gratuities backlog, other reforms include abolishing early retirement after 20 years of continuous service and opting for early retirement at 50 years of age.
The recommendation is one of the pension reforms government plans to carry out to reduce the pensions bill and encourage Malawi civil servants to serve longer.
Reacting to the proposal to reduce the age at which a civil servant can retire early, Civil Service Trade Union (CSTU) general secretary Madalitso Njolomole said government should first establish reasons why early retirement after 20 years of service was opted for.
He said: “We are supporting the new contributory pension scheme as long as no civil servant will be oppressed and no scenarios are created in future to oppress us.”
Government also plans to adopt the National Pension Scheme in line with the Pensions Act of 2011 with the aim of reducing the burden on the government coffers to make the pension bill sustainable.
