Proposed Pension Bill Outrages Malawi Workers

By Lameck Masina Reprint | | Print |

Lameck Masina

BLANTYRE, Oct 20 2010 (IPS) - A draft pension bill has created great concern among workers in Malawi, with some hurriedly seeking early retirement before it will be passed. The bone of contention is a section pegging the retirement age for women at 55 and men at 60.

Labour experts say this age bracket is far too high in a country like Malawi, where the World Health Organisation estimates the average life expectancy at 50 years.

It is the first time that the country will have a law specifying a retirement age. Up until now, companies made their own arrangements with their employees, who pay into a savings fund – which is commonly called ‘pension fund’ – that they can access whenever they need to.

The proposed bill, however, will formalise pension schemes, make them mandatory and allow employees to access the money only after they have reached the specified retirement age.

According to the draft bill, workers may retire before the stipulated age only under special circumstances, such as for medically-certified health problems or permanent emigration from Malawi, for example.

Malawi Congress of Trade Unions (MCTU) president Luther Mambala says that if approved, the bill if approved will mean that most people will never be able to reap the benefits of their labour.

Mambala believes the draft bill has been modelled on the pension laws of developed countries where life expectancy is high, without taking into consideration the different circumstances in Malawi. He wants the retirement age in the draft bill to be lowered to 40 years for women and 45 years for men.

The union has started to hold awareness raising campaigns about the problems of the draft bill throughout the country, which have propelled workers to call on government to review the bill. MCTU has threatened government with strikes if workers’ concerns are not taken into consideration.

In the meantime, many employees have started to resign from their jobs and collect their share of the ‘pension’ or savings fund, fearing that they will not see any of their money if the bill gets passed in parliament.

Patrick Lunda, a 30-year-old journalist working for Blantyre Newspapers Limited, is one of the employees who decided to tender their resignation because of the proposed bill.

“[Before the draft bill was tabled], I had no intention to resign. But considering my age, I felt there is no reason why I should wait for another 30 years to have my pension,” he explains.

Given Malawi’s low life expectancy, Lunda says he would like to retire earlier than 60 and even fears he might die before reaching the proposed retirement age.

Forty-five-year-old Mercy Muyaya, a secretary at a clothing factory – she preferred not to name her employer – is another who resigned in order to collect her pension before the passing of the bill. She has been paying into the factory’s savings scheme for 20 years.

“I will use my ‘pension’ monies to start my own business. We save this money for a purpose. It wouldn’t be good to collect it when I am frail. I am totally against imposing any age limit,” she says.

The proposed bill has also already had an impact on Malawians’ ability to apply for loans. Before the bill was tabled, employees could use their ‘pension’ fund as security for a loan, but since government announced the draft of the pension bill, banks have changed the rules.

“We are now asking the employer to confirm that that the employee works for that organisation and ask them to send their employees’ salary directly to us so that we can recover the monthly loan repayment,” Anne Magola, corporate affairs manager at the National Bank of Malawi, told the country’s Daily Times newspaper.

Billy Banda, executive director of human rights organisation Malawi Watch, says the proposed bill denies workers their rights.

“How many of us will reach the age of 60? The purpose [should be] that you enjoy your benefits when you are alive and healthy, so that you can use that money, but this bill is defeating the essence of [the concept of] pension,” he says.

He has urged Malawian president Bingu wa Mutharika to speak up, believing he is the only one who can put the issue to rest.

But Malawi’s political elite insists the proposed pension bill will ultimately benefit workers. Labour minister Yunus Mussa says it seeks to safeguard workers after retirement and assist old people to continue enjoying life. He concedes, however, that government is prepared to discuss the concerns MCTU has raised.

Banda believes this is merely lip service to smooth over a tense situation, noting that no compromise will be reached unless president Mutharika intervenes.

“President Mutharika is enjoying absolute power [in Malawi]. Our parliamentarians will pass whatever the president gives his nod to. I am strongly appealing to the state president to ensure that the concerns of the workers are addressed before the bill is presented to parliament,” he urges.

The passing of the pension draft bill will be tabled for parliament’s next sitting in November. Until then, it remains to be seen if the concerns of the country’s workers will impel Mutharika to suggest an amendment.