National pension investment growing tremendously at over K1.1 trillion from 59.2 billion in 2011

As at the end of 2020, national pension fund investment contributions was at K1.1 trillion up from K59.5 billion when the Pension Act was enacted while the same time membership has also tremendously grown from 73,800 to 472,347 in 2020.

This was disclosed on Monday by the Reserve Bank of Malawi (RBM) during a workshop that NICO Group organised to engage with various pension managers (employers) held at Sunbird Mount Soche Hotel in Blantyre.

RBM’s Principal Examiner of Pension and Insurance Regulation, Pachalo Luhanga also said challenges faced include pension administration by some employers as pension arrears rose from K9.1 billion in 2011 to K15.3 billion as of 2020.

However, the Pension Act also includes a clause to fine non-remitting pension trustees whose penalty interest is at 22% at bank rate interest and penalty.

Another challenge the pension regular noticed was that employees do not follow up on their pension contributions to see if their employers are remitting, thus Luhanga applauded NICO for its continued organising of the pension client engagement seminars.

He implored on the pension trustees to maintain visible with their employees by engaging them on the latest developments in the industry since penalties shall included the employees.

“Non compliance of pension remittances is mostly due to inefficiencies on the part of pension trustees, thus the inclusion of a penalty on non-remittance,” he said.

In his presentation, NICO Asset Managers Chief Investment Officer, Daniel Dunga said out of the national pension funds, NICO’s total assets is at K308 billion as of the third quarter of 2021 from K27 billion in 2012.

Since January this year, member contributions at K27.3 billion while its income from various investments is currently at over K33.9 billion with a return growth of 13.9%.

He applauded the government, through RBM that the enactment of the Pension Act from voluntary contributions to mandatory.

Dunga also said the old system allowed employers to forfeit their pension contributions.

“Some retirees were not living longer in their retirement due to stress that came along due to lack of finance to sustain themselves,” he said.

“Today, retirees received 40% lump sum while the rest is kept by pension market players to disburse on monthly basis.

“This gives the pensioners the peace of mind as they are assured of payment at the end of the month, whose lump sum earns interest and the beneficiary has the option to also invest on the excess of the monthly payments.”

He said the investment they carry out using the pension contributions assures the value of the money is preserved in order for members to receive it at current market value at point of retirement.

“It’s our sacred responsibility as pension investment managers to strictly adhere our mandates by managing all the risks for measurable growth while engaging clients on extensive financial report,” he said.

NICO Group invests the pension contributions with various companies listed on the Malawi Stock Exchange, into government financial securities, fixed deposits, corporate bonds and other unlisted equities.

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