Pension (Payment of Pension and Provident Fund Benefits) Directive, 2024

GOVERNMENT NOTICE NO. 47 PENSION ACT (No. 6 of 2023) PENSION (PAYMENT OF PENSION AND PROVIDENT FUND BENEFITS) DIRECTIVE, 2024 IN EXERCISE of the powers conferred by section 68 of the Pension Act, I, DR. WILSON TONINGA BANDA, Registrar of Financial Institutions, issue the following Directive— Citation Interpretation Objective Application for payment of benefits

1. This Directive may be cited as the Pension (Payment of Pension and Provident Fund Benefits) Directive, 2024.
2. In this Directive, unless the context otherwise requires— “medical practitioner” means a medical practitioner approved by a trustee and listed on a list of medical practitioners maintained by the trustee; and “statement of benefits” means a statement containing details of benefits due to a member or beneficiary under a pension or provident fund.
3. The objective of this directive is to prescribe requirements and procedure for payment of benefits from pension and provident funds.
4. (1) A member who wishes his or her benefits in a pension or provident fund to be paid to him or her or transferred to another pension or provident fund, shall apply for the payment or transfer to the trustee of the pension or provident fund, in writing.

(2) A beneficiary who wishes his or her benefits in a pension or provident fund to be paid to him or her shall apply for the payment to the trustee of the pension or provident fund, in writing. (3) An application for payment or transfer of benefits under subparagraph (1) or (2) shall be accompanied by supporting documents specified in fund rules of the pension or provident fund. 5. (1) A trustee shall, within fourteen days of receipt of a complete application under paragraph 4, pay the benefits to the member or beneficiary or transfer the benefits to the other pension or provident fund specified by the member. (2) Where–– (a) the supporting documents provided by the member or beneficiary are incomplete, the trustee shall pay the benefits to the member or beneficiary, or transfer the benefits to the other pension or provident fund, within fourteen days of receipt of complete documents; or Period for payment or transfer of benefits (b) processing of payment of the benefits can only be made upon completion of an investigation by an independent investigator engaged by the trustee–– (i) the investigation shall be concluded within twenty-eight days of receipt of all the relevant documents in support of the application; and (ii) the trustee shall pay the benefits within fourteen days of receipt of a report of the investigator recommending payment of the benefits to the member or beneficiary. (3) A trustee who fails to pay benefits to a member or beneficiary or transfer the benefits to the other pension or provident fund specified by the member within the period prescribed under subparagraph (1) or (2) shall be liable to pay to the member or beneficiary a penalty interest on the total amount of benefits due at the prevailing Reserve Bank of Malawi policy rate, compounded each day of the period the benefits remain unpaid after the prescribed period. (4) For purposes of this paragraph “independent investigator” means an investigator who is not an employee or trustee of the fund or a close relative of an employee or trustee of the fund. 6. (1) The trustee shall, at least seven days prior to making payment of benefits, provide to the member or beneficiary a statement of benefits containing information specified in the First Schedule. (2) The member or beneficiary shall, prior to receiving the benefits, sign the statement of benefits. (3) A trustee of an unrestricted pension fund shall, on the choice of a member, preserve within the pension fund or transfer to another pension fund, any balance of the pension benefits accruing to the member after making the payment. Payment of benefits 12th July, 2024 289

Early payment of benefits Payment of benefits of a member leaving the country permanently 7. (1) A trustee shall pay benefits to a member under section 88 of the Act upon the member submitting (a) a certificate or letter of termination of employment from the previous employer; and (b) an attestation that the member has not secured employment with another employer for a period of at least three months from the date his or her employment with the previous employer was terminated. (2) Upon approval of an application for early payment of benefits, where the total amount of employer contributions, employee contributions, severance due entitlement, and investment income on employer contributions, employee contributions and severance due entitlement (a) exceeds one million five hundred thousand Kwacha, the trustee shall (i) pay to the member only employee contributions and investment income on employee contributions; and (ii) preserve or transfer to the default fund or any unrestricted pension fund of the choice of the member, the employer contributions, severance due entitlement and investment income on employer contributions and severance due entitlement; or (b) does not exceed one million five hundred thousand Kwacha, the trustee may, on the choice of the member, pay to the member the total amount in the account of the member. (3) For purposes of subparagraph (1)(b), a sworn statement of the member or a letter signed by the member shall suffice as a valid attestation. 8. (1) A trustee shall pay benefits to a member under section 91 of the Act upon the member submitting (a) details of the destination country, including address of residence; and Payment of benefits on being permanently disabled (b) documentation showing emigration status of the member, including (i) permanent residence permit or citizenship of the destination country; and (ii) proof of permanent or planned permanent relocation to the other country. 9. (1) A trustee shall pay benefits to a member on the basis that the member is totally and permanently disabled, upon the member submitting (a) a medical report issued by a medical practitioner confirming that the member is totally and permanently disabled; and (b) a letter from the employer confirming retirement of the member on the basis that the member is totally and permanently disabled. (2) Where the member is not employed at the time of suffering the total and permanent disability, the member shall be exempted from the requirement to submit the letter specified under subparagraph (1)(b). 290 12th July, 2024

(3) A trustee shall maintain a list of approved medical practitioners and make the list available to members of the pension or provident fund of the trustee. 10. (1) The threshold for payment of pension benefits as a lump sum under section 91(2)(b) of the Act shall be as prescribed in the Second Schedule. (2) A trustee shall pay to a member pension benefits as a lump sum under section 91(1)(e) of the Act only once prior to retirement. (3) In determining the total value of the pension benefits payable under subparagraph (1), the value of benefits accumulated by the member at retirement shall include the amount accessed by the member under section 91(1)(e) of the Act. 11. (1) A trustee shall notify a member, in writing, of the impending retirement date of the member at the following intervals (a) ten years to the retirement date; (b) five years to the retirement date; and (c) after the notice in clause (b), annually. (2) The notification issued under subparagraph (1)(b) and (c) shall include a quotation of programmed withdrawal and annuity. (3) The trustee shall, prior to paying pension benefits to a member on retirement, verify— (a) that the member has reached the prescribed retirement age; and (b) if the member was in employment at the time of applying for the benefits, that the member has ceased to be employed. 12. (1) A trustee shall pay death benefits to a beneficiary if the application for the benefits is accompanied by (a) where the death occurred in Malawi (i) a death certificate issued by the National Registration Bureau; (ii) a death report issued by a medical practitioner registered under the Medical Practitioners and Dentists Act; or (iii) a letter confirming death bearing the signature and official stamp of the District Commissioner or Chief Executive Officer of the local government area of origin of the member or Traditional Authority of the area of origin of the member; or (b) where the death occurred in another country, a death report issued by a competent medical practitioner from that country. (2) Where a member was employed at the time of death, the trustee may, in addition to documents required under subparagraph (1), require the beneficiary to submit a letter from the employer confirming the death. Lump sum payments Notification of retirement and payment of benefits on retirement Payment of death benefits Cap. 36:01 12th July, 2024 291

Procedure on transfer of benefits, etc. Crediting of benefits upon transfer Prevention of fraud (3) Where a beneficiary submits an application for payment of death benefits on the basis that the member is presumed dead, the application shall be accompanied by (a) a letter from the employer; (b) a letter bearing the signature and official stamp of the District Commissioner or Chief Executive Officer of the local government area of origin of the member or Traditional Authority of the area of origin of the member; and (c) a police report, confirming that the member has been missing for at least three years. (4) The trustee shall, prior to paying death benefits to the beneficiary, provide to the beneficiary a copy of the nomination submitted by the member to the trustee. 13.—(1) A trustee shall, at least seven days prior to transferring benefits to another pension or provident fund in accordance with paragraph (5), provide to the member a statement of benefits containing information specified in the First Schedule. (2) The trustee shall, upon transfer of benefits to another pension or provident fund submit to the other fund the statement of benefits of the member. (3) A trustee of a defined benefit pension fund shall calculate the actuarial fair value of pension benefits accrued in line with the pension fund rules of the fund, and transfer the benefits to the pension fund specified by the member. 14.—(1) A trustee shall, upon receipt of transferred benefits under paragraph 13, credit the benefits into the account of the member specifying— (a) employer contribution; (b) investment income on employer contribution; (c) employee contribution; (d) investment income on employee contribution; (e) additional voluntary contribution; (f) investment income on additional voluntary contribution; (g) severance due entitlement; and (h) investment income on severance due entitlement. (2) The trustee shall, in addition to crediting the account of the member as specified in subparagraph (1), specify in the account— (a) where the member was paid a benefit within the period of five years to retirement, the amount paid to the member; and (b) fees and charges levied on the account. 15. A trustee shall put in place measures to prevent fraud in the payment of benefits. 292 12th July, 2024

16. (1) Where a trustee contravenes or fails to comply with any provision of this Directive, the trustee and any member of the board of directors or management of the trustee, shall be liable to a monetory penalty (a) in the case of a corporate trustee, of up to K50,000,000; and (b) in the case of a natural person, of up to K10,000,000. (2) The offender shall pay the penalty imposed under subparagraph (1) (a) within five days from the date the notice of the penalty is received by the offender; and (b) through an electronic bank transfer in favour of the Reserve Bank of Malawi. (3) In addition to a monetary penalty imposed under subparagraph (1), the Registrar may issue any direction to, or impose on, the offender any administrative penalty prescribed under the Act or the Financial Services Act.
17. The Pension (Payment of Benefits for Pension Fund) Directive, 2014 is hereby revoked. Monetary and administrative penalties Cap. 44:05 Revocation GN. 33/2014 FIRST SCHEDULE (para. 6(1) & 13(1) STATEMENT OF BENEFITS A statement of benefits shall, at a minimum, contain— (a) name of the fund; (b) the business address of the fund; (c) names of trustees of the fund; (d) name of the member; (e) date of employment of the member; (f) employer contribution, where applicable; (g) investment income on employer contribution, where applicable; (h) member contribution; (i) investment income on member contribution; (j) severance due entitlement, where applicable; (k) investment income on severance due entitlement, where applicable; (l) additional voluntary contribution, where applicable; (m) investment income on additional voluntary contribution, where applicable; (n) amount accessed within five years to retirement, where applicable; (o) fees and charges levied on the account; (p) total pension benefits; (q) total death benefits, where applicable; (r) withdrawal option; and (s) exit declaration*. *A declaration to be signed between a trustee and a member, beneficiary or legal representative of the beneficiary evidencing the exit of the member or beneficiary from the pension or provident fund. 12th July, 2024 293

SECOND SCHEDULE (para. 10(1)) Amount of calculated programed withdrawals, annuities or pension which a member may commute into lump sum. Age of a member at retirement Amount of lump sum (in Kwacha) <50 . . . . . . 14,395,921.12 51 . . . . . . 14,146,960.46 52 . . . . . . 13,897,570.95 53 . . . . . . 13,647,990.97 54 . . . . . . 13,391,821.47 55 . . . . . . 13,142,430.00 56 . . . . . . 12,893,674.43 57 . . . . . . 12,645,875.99 58 . . . . . . 12,392,334.52 59 . . . . . . 12,146,397.32 60 . . . . . . 11,901,483.22 61 . . . . . . 11,658,241.21 62 . . . . . . 11,410,263.03 63 . . . . . . 11,171,665.51 64 . . . . . . 10,935,996.34 65 . . . . . . 10,704,011.51 66 . . . . . . 10,469,844.63 67 . . . . . . 10,247,088.02 68 . . . . . . 10,029,632.66 69 . . . . . . 9,818,276.66

70 . . . . . . 9,608,132.01 Issued this 12th day of July, 2024 DR. W. T. BANDA (REF. NO. FIN/PFSPD/02/03) Registrar of Financial Institutions 294 12th July, 2024