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CAPITAL HILL’S LONE   FIGHTER REVEALS PENSION PROCESSING FLAWS

On January 4, 2024, Hendrina Kamenya, a 23-year-old woman, stunned the administrative powers at Capital Hill in Malawi by single-handedly challenging the injustice of her late father’s delayed gratuity payment.

Exhausted by three years of bureaucratic runaround, Kamenya stood firm at the government’s doorstep, placard in hand, demanding action from the Accountant General’s office.

“The constant delays have worn me down. I’m here to demand the long-overdue justice,” she declared.

Despite her academic success (She passed the Malawi School Certificate of Education Examination with 11 points) and acceptance into the Malawi University of Business and Applied Sciences, financial barriers forced her to withdraw. Three years down the line and resolute, Kamenya took her protest to Capital Hill where she held a lone vigil.

Her solitary protest caught the attention of social media influencers and reached the Secretary to the President and Cabinet, Colleen Zamba.  She met with Kamenya that evening, pledging swift action to process the outstanding gratuity.

Acknowledging the pension fund’s liquidity issues, Zamba assured Kamenya, “We’ve been addressing the backlog of cases  since December 2023. However,  be assured all will be well and you will receive your father’s gratuity.”

Zambia met Kamenya in the evening assuring her the gratuity will be processed.

Comforted by this promise, Kamenya left Capital Hill.

Kamenya’s plight is just one of the cases of  many Malawians who face socioeconomic hardships due to pension payment delays.

In 2023, the Ombudsman directed Mangochi District Council to release gratuity funds to Ellen and Bridget Linje after a 16-year delay. Fanny Sumani, the Linje sisters’ guardian since their father died in 2008, was shocked to hear that  an unknown individual had allegedly claimed the gratuity, depriving the girls of proper care and educational opportunities. She sought the Ombudsman’s intervention for justice.

Ombudsman Grace Malera stated, “Countless Malawians suffer from such injustices. My office is committed to delivering justice to those wronged, regardless of systemic delays.”

Through the Ombudsman’s influence,  Ellen and Bridget Linje received their late father’s gratuity.

The Ombudsman’s ruling and Zamba’s intervention prompted Ministry of Justice Spokesperson Frank Namangale to acknowledge the financial burden caused by pre- and post-disbursement delays.
“The new Pension Act has streamlined payments, but gratuity tied to estates still faces High Court delays,” he explained.
Development expert,  Andrew Kaponya suggests transferring estate administration to magistrate courts to alleviate the High Court’s case backlog.
“Decentralization is key. It’s time to empower magistrates to expedite these matters, aiding beneficiaries and easing their burdens, since the High Court is laden with other equally important cases,” Kaponya advocated.

Old Mutual Malawi one of the pension funds administrators has been advocating that employers should timely remit pension deductions to fund administrators so that employees should not lose out on interests and dividends on their policies. At the time of writing this report, a total of K14.5 billion was still not remitted to pension fund administrators.

Patience Chatsika Old Mutual Malawi’s Marketing and Corporate Communications Manager said statutory deductions are supposed to be remitted on time.

“There’s a whole K14.5 billion not remitted to pension fund managers. This affects the work of pension fund administrators. In the new Pension Act there are amendments that we expect the press to highlight to the masses so that we should be on the same page,” said Chatsika on the sidelines of a training organised for Business Journalists in collaboration with MISA Malawi.

MISA Malawi Vice Chairperson, Chisomo Ngulube,  lauded Old Mutual Malawi for training the journalists so that they sensitise the masses on the key issues in the new Pension Act.

“We thank Old Mutual for equipping our members with this specialised knowledge. Henceforth they will be writing from an informed perspective,” said  Ngulube.

To prevent a recurrence of Linje daughters’ scenario where an unknown person was alleged to have already collected gratuity from late Linje’s estate, Old Mutual is also advocating that employees should ensure that their personal pension policy records are up to date.

“We want all employees to recognize the importance of regularly updating Beneficiary Nomination Forms, and maintenance of one pension account at all times as guided by the 2023 Pension Act,” said Chatsika.

Some key highlights of the 2023 Pension Act include:
·        Three months waiting period to access pension funds if out of employment as compared to six months in the repelled Pension Act
·        Provision to access 50 percent of the pension money five years before retirement
·        Institutions that default remitting pension deductions to be given deterrent  penalties of about K150 million
·        Opening up the pension schemes to people in the informal sector to make savings for their retirement a diversion from an occupational-based approach.

To amplify the essence of pension funds, the Chief Examiner Responsible for Pensions at the Reserve Bank of Malawi, Kaluso Chihana,  said the new Act is pushing for sanity in that space of the financial sector.

“Previously the focus was more on administration and it is institutions that were being penalised but now the new Act will hold all errant officers in institutions to task if they deduct pension funds and don’t remit the same,” said Chihana.

One of the legal practitioners in the country, Pempho Likongwe of Likongwe and Company, reiterated the importance of increasing literacy on pension funds and their management.

“We must strive to read and understand the new Pension Act. Let us encourage employees to be conversant with the Act too, this is their lifeline after retirement. So don’t get loans and pledge security of your pension funds that is not permissible by the law,” said Likongwe.

He further said pension funds can transform the country when rightly invested  such as the  NICO Chichiri Shopping Complex in Blantyre and a similar infrastructure in Lilongwe which were both financed by pension funds.

Kamenya and Linje sisters’ predicaments should act as a wake-up call to everyone why pension funds are commonly referred to as ‘Lifeline after retirement!’ and need to be jealously guarded and disbursed on time to the right beneficiaries like the lone fighter at Capital Hill.

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