Court thwarts employer’s stand on pensions

Malawi judiciary says pension benefits accrued before enactment of the Pension Act must be accessed by members even before reaching retirement age.

The Industrial Relations Court (IRC) made this ruling on Monday where it ordered Blantyre Water Board (BWB) and its insurance company, Old Mutual, to pay the board’s 77 retrenched employees their pension benefits though there is a new Pension Act.

The employees’ lawyer Patron Ndlovu of Mpando law Firm said there was an application against BWB and Old Mutual, asking the court to order them to pay retrenched staff their pension benefits within 14 days.

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He said after hearing arguments from both sides the court ruled that pension benefits must be paid within seven days.

Ndhlovu told the local press that the argument was mainly based on the new Pension Act as to whether the pension is payable or not before attaining the retirement age of 60 and 55 for males and females respectively.

“We advanced an argument to say that pension benefits are still payable up to May 31 when this new act came into force. So, the new Pension Act does not apply to anything before that,” Ndlhovu said.

Ndlhovu further said Section 87 (1j) of the Pension Act provides that “all the rights of the members to gain access to the pension benefits which had accumulated up to the date of this act shall be retained by the members”.

“In other words, it is only from June 1, [2011] onwards that a member cannot access all the pension contributions until he reaches a retirement age,” Ndhlovu concluded.

Blantyre Water Board retrenched its 77 employees in August and September, saying it was undergoing a restructuring process.

“The board is undergoing an organisational restructuring process which has resulted in the creation of new positions, deletion of others and downsizing a number of staff.

“It is in this regard that I regrettably inform you that your position of … has been affected and as such you have been retrenched from the Board’s services,” reads one of the retrenchment letters dated August 29, signed by the Board’s Director of Finance H M Bakuwa.

Bakuwa, in the same letter indicated some of the terminal dues the Board would pay in accordance with its regulations which included their pension contributions.

“[You will get] one month salary in lieu of notice; commutation of two leave days; severance allowance and refund of pension contribution upon receiving the same from Old Mutual,” reads the letter.

However, both the BWB and Old Mutual could not release the said pension benefits, a development which prompted the retrenched workers, led by Samuel Master, to seek court intervention.

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