Malawi govt puts on hold civil service compulsory pension scheme
Treasury says it has again put on hold the K350 billion civil service compulsory pension scheme which was expected to take off in this new financial year because the government is too broke to implement such a scheme.
This is the third year running that the government has postponed the implementation of such a scheme since parliament passed the mandatory pension scheme for all workers in Malawi in 2011.
“The government cannot do it now. The government has no money to implement it,” said treasury spokesman Nations Msowoya.
He said when the government decides to implement the mandatory civil service pension scheme probably in the next financial year next year, it will do it in phases, starting with the newly recruited civil servants.
“We won’t roll it out wholesome because it will require a lot of money so we will do it in phases spread in a number of years,” he said.
Former president Bingu wa Mutharika forced the passing of the mandatory pension scheme after donors withdrew aid and he wanted his administration to set up pension funds where the government could be borrowing money to fund government operations.
His government was then borrowing money from commercial banks to fund government activities which was extremely expensive as bsnk interests were high.
If implemented, civil servants will have a once take home pension than the current arrsngemernt where civil servants are given some money and they withdraw another amount on every 14th of every month until they die.
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Nyasatimes, are u sure of the assertion u want us to believe that once govt adopts the New pension Act retiring civil servants will only be entitled to a one lump sum retirement package without the monthly payments they get? Which section of the Act stipulates this??? This allegation has potential of raising irrelevant fears. Titsimikizireni that this is as contained in the relevant laws of Malawi.
“Government too broke” End of quote from the horse’s mouth. I rest my case.
Just bite the bullet and phase in the scheme asap starting with the new recruits. Problem is, the longer it takes, the more compounded the problem will get. In the mean time, civil servants are being disadvanted (relative to private sector counterparts) unless if loss of pension fund earnings are being accrued – which is doubtful considering GoM’s cash basis of accounting. Why can’t GoM create fiscal space for this important scheme by toning down the socialist agenda: epitomized by the malata subsidy? A vibrant pension regime is imperative in any serious economy. We can’t be singing this “suspension” tune… Read more »