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Understanding Pensions - The Malawian context

Understanding Pensions - The Malawian context. Rationale and Policy Objectives. RESERVE BANK OF MALAWI. outline. What is pension? Reforming pensions Objectives of the Pensions Act. What is Pension?. In simple terms; Income for retirement Online Oxford Learner’s Dictionary;

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Understanding Pensions - The Malawian context

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  1. Understanding Pensions - The Malawian context Rationale and Policy Objectives RESERVE BANK OF MALAWI

  2. outline • What is pension? • Reforming pensions • Objectives of the Pensions Act

  3. What is Pension? • In simple terms; • Income for retirement • Online Oxford Learner’s Dictionary; • An amount of money paid regularly by a government or company to somebody who is considered to be too old or too ill/sick to work • Merriam-Webster online dictionary; • Fixed sum paid regularly to a person, as • Wage • Gratuity granted (as by a govt) as a favour or reward • One paid under given conditions to a person following retirement from service or to surviving dependents

  4. What is Pension? …cont’d • So, typical features of a pension must include: • An element of service/work (self employment) • Retirement from service through any of the following fragilities; • Too old • Too ill/sick • Death • Given conditions • Regular payment • Clearly, pension focus is on security in retirement • Other financial products to meet different needs • Only possible if the context is set right through pension reform

  5. Reforming Pensions • Reform objectives range from any of the following: • Social security - increase coverage and benefits; • address the growing fiscal burden; • strengthen supervision, regulation, governance etc. • taxation • Experience of other countries taken into account • Situation was worse for Malawi • Severance allowance in Employment Act, 2000 • Pension Act, 2011 • Mandatory National Pension Scheme

  6. Objectives of Pension Act • Section 4 of Pension Act, 2011 states the following as objectives; • ensure that every employer to which this Act applies provides pension for every person employed by that employer; • ensure that every employee in Malawi receives retirement and supplementary benefits as and when due; • promote the safety, soundness and prudent management of pension funds that provide retirement and death benefits to members and beneficiaries; and • foster agglomeration of national savings in support of economic growth and development of the country

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