Malawi

On March 1,2011, Malawi’s Parliament passed a bill establishing a system of mandatory individual accounts for most workers in the country. Although it has not yet been signed by the president, he is expected to sign the bill into law soon. While many of the specific details (such as coverage, investment rules and withdrawal rules) are not yet available, the following key provisions of the bill were made public.

  • Employees with earnings above a minimum salary threshold (not yet established) will contribute 5%  of salary to a new national pension fund. Employers will be required to contribute 10% of salary for all employees who have worked for them for at least 12 months.
  • Workers will be able to retire at age 50 or older with at least 20 years of service. Retirement can be deferred until age 70 ("maximum retirement age").
  • Workers who are unemployed for more than 6 months will be able to withdraw a portion of their individual account balances prior to reaching the minimum retirement age.

Before said bill, there was no public pension system for private-sector workers in Malawi. However, the government encouraged state-run and private-sector companies through favorable tax policy to provide voluntary occupational retirement plans to their employees (by 2008, around 150,000 workers were covered by 450 private pension funds). Public-sector workers are covered under the pay-as-you-go Government Public Pension Scheme (GPPS).

 

Article with courtesy of Social Security Online

Sources:"Malawi," International Update, October 2005, US Social Security Administration; "Financial Sector Assessment: Malawi," World Bank andInternational Monetary Fund, July 2008; "MCTU Happy with New Pension Law as Government is Defeated," Malawi Voice, March 1, 2011; "Malawi Modifies Pension Bill," The Nation, March 1, 2011; "House Passes Pension Bill," BNL Times¸ March 2, 2011; "Malawi: New Pension Scheme Introduced," US Library of Congress, March 9, 2011.

 
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