As they continue with their whistleblowing campaign, Human Rights Defenders Coalition (HRDC) has exposed that administrator of Malawians’ pension money is a Kenyan company—something the organization suspects corruption in how they were awarded.
HRDC has since written the Anti-Corruption Bureau (ACB) to investigate the Public Service Pension Trust Fund (PSPTF)—which runs Malawians’ pension money—appointed Zamara Pension Administrators Limited as its administrators.
Zamara Pension Administrators Limited is a Kenyan company with no foothold in Malawi and could not have been given business of this nature.
A letter signed by HRDC Chairperson Gift Trapence and National Coordinator Luke Tembo—endorsed by the rights body’s regional leaders—to ACB Director- General Reyneck Matemba, notes that:
“We find the award of such a serious contract that affects livelihoods of senior citizens to a company with no foothold in the country questionable. We urge the Anti-Corruption Bureau to suspend the award of the contract and carry out urgent investigations,” reads the letter.
The letter also says HRDC has information that local companies such as Old Mutual, National Bank and Nico Life also applied to be administrators of the scheme, pegged at K556.8 million, which is 0.4 percent of the public wage bill but were overtaken by the ‘foreign’ firm.
“It is alleged that National Bank and Nico were eliminated after evaluation of the technical proposals. It is also alleged that Zamara flew the pension fund trustees to Kenya for an unknown meeting,” reads the letter.
Trapence told Malawi media on Thursday that HRDC has written ACB on the matter and that they expect the graft-busting institutions to act on the tip-off.
“We want the ACB to investigate circumstances surrounding the award of this serious deal which affects livelihoods of our senior citizens. It is important that the funds are managed by a company with traceable roots and not some company whose only aim is to make profits from our seniors citizens’ money,” he said.
In a shocking notice published in the local press on Wednesday, the PSPTF states that it has finalised the evaluation process and intends to award the K556.8 million contract to Zamara Pension Administrators Limited of P.O. Box 2766, Blantyre.
Meanwhile, a tax expert has warned that while Value Added Tax (VAT) on pension administration fees may not be applied on pension savings, it may be passed on to the populous from pension managers through charges.
A leaked communiqué between a pension administrator and its client indicates that VAT will start being effected on pension administration fees from September 1, 2020.
“We would like to advise you that the industry has received communication from Malawi Revenue Authority (MRA) that VAT will be levied on pension administration fees effective September 1, 2020.
“This means that going forward, on the current administration fees paid by your organization, you should add VAT at the value of 16.5 percent of fees payable,” reads the letter in part.
Ministry of Finance spokesperson, Williams Banda, said that the VAT will only apply on earnings that fund managers make from their services.
“Pension administrators charge an administration fee for managing pension schemes; the fee attracts VAT like any other fee charged on taxable services.
“The general public should note that according to the VAT Act, pension contributions do not attract VAT while fees for administering pensions do attract VAT,” Banda said.
But tax expert Emmanuel Kaluluma, wondered why such tax could not be exempted as is the case with the banking and insurance sectors.
“It means that down the line when they pay that money as VAT, they will push it to the members of the pension fund. However, we are asking why VAT now when the pension fund has been there all along? Of course it is because of the restructuring going on.
“In the VAT Act, banking and insurance services are exempted from VAT; now why not take that exemption to the pension fund managers because insurance companies were doing the same work but were not being charged VAT?” Kaluluma queried.Follow and Subscribe Nyasa TV :