Overview

Pension was first introduced in Malawi during the colonial days and continued to exist as an employment benefit voluntarily offered by employers. Many employees were not on pension as it was not mandatory. Pension funds were only required to register with the Commissioner of Tax for purposes of tax administration pursuant to the third schedule of the Taxation Act, now repealed. However, there was no regulation and supervision of pension.

In June 2011, the Pension Act was promulgated and introduced a national pension scheme that mandates all employers to enroll their employees with a pension fund, unless exempted. The following categories of employees are currently exempted: domestic workers, tenants, seasonal workers, expatriates with a valid temporary employment permit and serving members of parliament.

The objectives of the Act were broadly designed to achieve wide coverage, adequacy of pensions in retirement, security of pension savings, efficiency in placing investments and sustainability of pension funds. As a policy, the law requires preservation of pension savings until retirement and sets conditions for payment of pension benefits. The pension sector comprises pension funds, pension fund trustees, pension services companies, pension administrators, custodians, and pension brokers.

Pension assets continue to grow steadily since introduction of the Act. The primary objective of pension is to provide income in retirement. In addition, pension funds play a critical role in the accumulation of national savings which are used for infrastructure development, thus positively contributing to economic growth and development.