Our Comments on Idle Pension Funds

Is Malawi suffering from the embarrassment of riches? We seem to have accumulated huge savings through our national pension fund now at  (K825.3 billion, representing 16.3 per cent of the Gross Domestic) . RBM projects that by end 2020  pension assets would swell to K1.1 trillion. However, we apparently have no clue what to do with the money.SEE HERE

The Governor of the Central Bank has complained about the low rate of translation of money into a growth-enhancing investment. Only a few days ago, Mr Chihana RBM Chief Examiner for Life Insurance and Pension Funds, said growth in assets has not translated into investments in infrastructure.

 “We have done very well to accumulate the savings but to translate them into infrastructure investment has been a bit of a challenge,” he said.

The new buzzword in development circles is "domestic resource mobilisation" instead of the debilitating focus on attracting aid. We will dance up and down because an IMF mission is coming when we can't find a use for the resources we already have. 

This is not a minor failure. It suggests gross incompetence on the part of those managing our pension funds. The head of the pension fund once suggested that we should export our funds to other countries apparently because there were no investment opportunities Malawi. This calls for a complete overhaul of the management of the pension fund to bring financial experts with some ideal of the great developmental potential of such funds. management of pension funds is not confined to simply receiving funds but also in investing the funds intelligently.  The levels of incompetence in our major financial institutions are simply mindboggling.

Pension assets at 16% of Gross Domestic Product - The Times Group Malawi

Pension assets at 16% of Gross Domestic Product - The Times Group Malawi: ension assets have been growing in the past eight years and now stand at K825.3 billion, representing 16.3 percent of the Gross Domestic Product, figures from the Reserve Bank of Malawi (RBM) show.

The passing of the Pensions Act in 2011 has seen a substantial rise in pension remittance.

Our Comment - On Pension Fund

CAN SOMEBODY STOP THE MADNESS? 

According to James Mhura, the CEO of Old Mutual Unit Trust, the trust  has approved a proposal by its shareholders to start offshore investments, which is the keeping of money in a jurisdiction other than one’s country. Apparently, there is no objections from the Reserve Bank.

Pension money is serious money and it is usually the largest amount of savings in most countries. It is also “patient” money which can be used for long term investments.  For countries like Malaysia and Singapore such funds were the backbone of the economy,  with Central Providence Fund (CPF) accounting for 50 per of national savings in Singapore   Until quite recently, these  most  successful pension schemes in the developing counters  did not allow investments in foreign securities. Only recently has Singapore permitted investment abroad and this only when the pension funds are huge.  Instead, they massively invested the funds domestically. Temasek, the CPF’commercial arm owns and manages a net portfolio of $308 billion[ (as of 31 March 2018). Temasek owns the iconic Singapore Airlines.

The restrictions on investing abroad not only force these funds to invest locally,  but also the ban on investing abroad is aimed at discouraging capital flight which will by unrestricted foreign investment institutionalize capital flight and deny domestic investors from benefitting from savings of the nation.

In South Africa, Old Mutual, which had thrived under apartheid, was allowed by Thambo Mbeki to move its headquarters to England. The consequence was massive haemorrhaging of the South African economy. Much of what is called foreign investments into South is simply round-tripping by these pensions fund- domiciles in London but freely extracting economic surplus from South Africa.

Malawi implemented the new Pensions Act of 2010 which, among other things, made pensions mandatory to all employees to build national savings. The fund has grown from  K59.5 billion in 2010 to 700 billion in 2019. With an estimated value of One billion dollars, the Malawi pension is only 17 per cent of GDP and we have allowed ourselves the leisure of sharing our puny savings with the rest of the world.

Apparently, our pension fund is run by people who haven’t the slighted idea as to what to invest in Malawi. How else can only explain the fact that these people have yet to find one decent example of transformative investment in Malawi?

It is quite sad  that the Governor of the Reserve Bank who has been talking  much sense lately about pensions in Malawi has allowed this to happen under his watch. .

Pension assets up 11.8% – The Nation Online

Pension assets up 11.8% – The Nation Online: Pension assets up 11.8%
Nation Online August 16, 2019 0 Comment
Assets in the pension sector increased by 11.8 percent to K801.1 billion over the past six months to June 2019, owing to increases in investment income and contributions, Reserve Bank of Malawi (RBM) figures have shown.

The growth was achieved despite the low interest rates environment and share price losses being registered on four domestic counters listed on Malawi Stock Exchange (MSE).

Pension assets grow | The Times Group

Pension assets grow | The Times Group: Pension assets went up by 34.6 percent in 2018 to close the year at K716.5 billion, Reserve Bank of Malawi (RBM) figures show.

In its 2018 Financial Institutions Supervision Annual Report issued last week, RBM attributes the rise to a growth in investment income and substantial growth in contributions following the registration of the Public Service Pension Fund.

Reserve Bank to Hold Symposium on Pension Funs

The Reserve Bank of Malawi (RBM) has announced it will on Tuesday hold a symposium in the commercial capital Blantyre whose aim is to discuss pension funds investment in infrastructural development In a statement signed by RBM governor, Dalitso Kabambe, the symposium will be held at Sunbird Mount Soche Hotel under the theme 'Investing Our Future  In Infrastructure.'  The pension fund is currently worth K746 billion.

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Contributory pension to double in five years—Treasury - The Nation Online

Contributory pension to double in five years—Treasury - The Nation Online: Contributory pension to double in five years—Treasury
Grace Phiri June 15, 2018 0 Comments
Ministry of Finance, Economic Planning and Development says it wants to increase coverage of contributory pension from eight percent to 15 percent of the workforce by 2021 by creating viable, long term investment avenues for growing reserves especially from the pension funds promoted.

The public service pension scheme is a defined benefit with unfunded liabilities estimated at 60 percent of the gross domestic product (GDP) in 2013. The Government is yet to roll out its pension scheme to defined contribution.

Old Mutual to invest $25 million in hostels | The Times Group

Old Mutual to invest $25 million in hostels | The Times Group:



Old Mutual to invest $25 million in hostels

Posted By: William Kumwembe on: March 27, 2018 In: Business No Comments

Old Mutual Investment Group has unveiled plans to invest $25 million [about Kl 8.3 billion] into a

public university hostels construction project.

The firm plans to complete the project within two years using pension funds and funds from yet-to-

be-disclosed development partners.

Old Mutual Group Chief Executive Officer, Edith Jiya, said this in Blantyre on Friday on the

sidelines of a signing ceremony of an agreement between one of the two successful bidders for

the project, M and M Consortium, representatives of the universities, government and the Public

Private Partnership Commission (PPPC).


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Malawi pensions among world’s fastest growing | The Times Group

Malawi pensions among world’s fastest growing | The Times Group: "Malawi pensions among world’s fastest growing
Posted By: Kingsley Jassion: October 21, 2015In: BusinessNo Comments
The Organisa tion of Economic Cooperation for Development (OECD) has rated Malawi’s pension industry among the fastest g rowing in the world following the sharp growth in pension savings and assets since the new Pension Act was enacted in 2011."



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