Social Security
Pension Rights
The Pension Act 2023 contains provisions on pension rights; however, the information within is very limited. The retirement age ranges between 50 (minimum) to 70 (maximum) years, although there is no mention of whether this limit is either for men or women or both. For qualifying for an old age pension, at least 20 years of service/contribution are required. Every employer is required to ensure that their employees are part of the National Pension Scheme as introduced by the Act. The minimum contribution rate for the National Pension Fund is 10% for the employers and 5% for the employees. There is only a limited mention of qualification requirements, according to which a person may be eligible for pension benefits if they have served a minimum of continuous twenty years with one employer. No provisions on the amount of pension that is paid to a retired worker could be identified. Prior to this law, there was no public pension system for private-sector workers in Malawi. However, voluntary occupational retirement plans were provided by the state-run enterprises and private sector firms. The public-sector workers are covered under the pay-as-you-go Government Public Pension Scheme (GPPS).
According to ISSA, in Malawi, the defined contribution (DC) pension benefit allows retirees to choose from three payment options. They can either purchase an annuity for lifelong regular payments, make programmed withdrawals from their pension savings, or receive a lump sum payout. The lump sum option is subject to a limit that decreases with age, meaning younger retirees can withdraw a higher amount compared to those retiring later.
Employers are required to maintain a life insurance policy for all their workers. The policy should cover at least one year’s pensionable emoluments to an employee. The benefits under a life insurance policy are part of the death benefits and hence distributed as specified under section 70 of the law.
Early old-age benefits are also available for both men and women at any age.
Moreover, deferred retirement is also allowed with the employer's agreement and follows the standard benefit calculation.
Source: §2, 12, 15-18 & 70 of the Pension Act 2023 (No. 6 of 2023); ISSA Country profile for Malawi
Dependents' / Survivors' Benefit
An employee entitled to pension can nominate his/her family members (Spouse, Child or close relative) and the amount of pension that will be shared between them after his/her death and the amount will then be paid accordingly. Benefits for the spouse are revoked upon divorce or remarriage.
If no valid nomination exists, benefits are distributed by the trustee to financial dependents. For beneficiaries under 18 (except a spouse), funds are held in trust until adulthood, with allowances for their maintenance, education, or welfare.
There is no mention of the qualification requirement in terms of contributions for entitlement to pension.
Source: §94-98 of the Pension Act 2023 (No. 6 of 2023);
Invalidity Benefit
In Malawi, pension benefits under the mandatory occupational pension scheme are payable upon certification by a registered medical practitioner or medical board confirming that a member is permanently disabled and unable to perform their job functions. Upon retirement, pension benefits may be directed towards a programmed withdrawal arrangement with an authorized provider, the purchase of an annuity from a licensed insurer, or a combination of both, as chosen by the member. However, if a member retires due to permanent disablement and their life expectancy is reduced as a result, the payment is made on an impaired life annuity basis to accommodate their condition.
Source: §87 & 90 of the Pension Act 2023 (No. 6 of 2023)
Regulations on Social Security
- Pension Act 2010 (No. 6 of 2011)
Pension Rights
The Pension Act 2023 contains provisions on pension rights; however, the information within is very limited. The retirement age ranges between 50 (minimum) to 70 (maximum) years, although there is no mention of whether this limit is either for men or women or both. For qualifying for an old age pension, at least 20 years of service/contribution are required. Every employer is required to ensure that their employees are part of the National Pension Scheme as introduced by the Act. The minimum contribution rate for the National Pension Fund is 10% for the employers and 5% for the employees. There is only a limited mention of qualification requirements, according to which a person may be eligible for pension benefits if they have served a minimum of continuous twenty years with one employer. No provisions on the amount of pension that is paid to a retired worker could be identified. Prior to this law, there was no public pension system for private-sector workers in Malawi. However, voluntary occupational retirement plans were provided by the state-run enterprises and private sector firms. The public-sector workers are covered under the pay-as-you-go Government Public Pension Scheme (GPPS).
According to ISSA, in Malawi, the defined contribution (DC) pension benefit allows retirees to choose from three payment options. They can either purchase an annuity for lifelong regular payments, make programmed withdrawals from their pension savings, or receive a lump sum payout. The lump sum option is subject to a limit that decreases with age, meaning younger retirees can withdraw a higher amount compared to those retiring later.
Employers are required to maintain a life insurance policy for all their workers. The policy should cover at least one year’s pensionable emoluments to an employee. The benefits under a life insurance policy are part of the death benefits and hence distributed as specified under section 70 of the law.
Early old-age benefits are also available for both men and women at any age.
Moreover, deferred retirement is also allowed with the employer's agreement and follows the standard benefit calculation.
Source: §2, 12, 15-18 & 70 of the Pension Act 2023 (No. 6 of 2023); ISSA Country profile for Malawi
Dependents' / Survivors' Benefit
An employee entitled to pension can nominate his/her family members (Spouse, Child or close relative) and the amount of pension that will be shared between them after his/her death and the amount will then be paid accordingly. Benefits for the spouse are revoked upon divorce or remarriage.
If no valid nomination exists, benefits are distributed by the trustee to financial dependents. For beneficiaries under 18 (except a spouse), funds are held in trust until adulthood, with allowances for their maintenance, education, or welfare.
There is no mention of the qualification requirement in terms of contributions for entitlement to pension.
Source: §94-98 of the Pension Act 2023 (No. 6 of 2023);
Invalidity Benefit
In Malawi, pension benefits under the mandatory occupational pension scheme are payable upon certification by a registered medical practitioner or medical board confirming that a member is permanently disabled and unable to perform their job functions. Upon retirement, pension benefits may be directed towards a programmed withdrawal arrangement with an authorized provider, the purchase of an annuity from a licensed insurer, or a combination of both, as chosen by the member. However, if a member retires due to permanent disablement and their life expectancy is reduced as a result, the payment is made on an impaired life annuity basis to accommodate their condition.
Source: §87 & 90 of the Pension Act 2023 (No. 6 of 2023)
Regulations on Social Security
- Pension Act 2010 (No. 6 of 2011)
