Malawians’ pension money corruptly awarded to Kenyan company, Hrdc exposes

As they continue their whistleblowing campaign, the Human Rights Defenders Coalition (HRDC) has revealed that the trustee of the Malawians’ pension funds is a Kenyan company – something the organization suspects of corruption in the way they have been assigned.

HRDC has since written to the Anti-Corruption Bureau (ACB) to investigate the Public Service Superannuation Trust Fund (PSPTF) – which manages pension money for Malawians – has appointed Zamara Pension Administrators Limited as its trustees.

Zamara Pension Administrators Limited is a Kenyan company which does not have a presence in Malawi and could not have been entrusted with activities of this nature.

A letter signed by HRDC President, Gift Trapence, and National Coordinator, Luke Tembo, endorsed by regional leaders of the advocacy body, addressed to ACB Director General, Reyneck Matemba, notes that:

“We find questionable the awarding of such a serious contract which affects the livelihoods of the elderly to a company with no presence in the country. We urge the Anti-Corruption Bureau to suspend the award of the contract and to carry out investigations urgent,” the report read. letter.

The letter also states that HRDC has information that local companies such as Old Mutual, National Bank and Nico Life have also applied to be administrators of the scheme, set at K556.8 million or 0.4% of the public payroll, but have been overtaken by the “foreign” company.

“It is alleged that National Bank and Nico were eliminated after the technical proposals were evaluated. It is also alleged that Zamara flew the pension fund trustees to Kenya for an unknown meeting,” reads the statement. letter.

Trapence told Malawian media on Thursday that HRDC had written to ACB about the matter and that they expect anti-corruption institutions to act on the whistleblower.

“We want the ACB to investigate the circumstances surrounding the awarding of this serious deal which affects the livelihoods of our senior citizens. It is important that the funds are managed by a company with traceable roots and not by a company whose sole purpose is to profit from our old people’s money,” he said.

In a shocking notice published in the local press on Wednesday, the PSPTF says it has finalized the evaluation process and intends to award the K556.8 million contract to Zamara Pension Administrators Limited of PO Box 2766, Blantyre.

Meanwhile, a tax expert has warned that while value added tax (VAT) on pension administration costs cannot be applied to retirement savings, it can be passed on to the most populous by pension managers through charges.

A leaked statement between a pension administrator and his client indicates that VAT will begin to be charged on pension administration fees from September 1, 2020.

“We would like to inform you that the industry has received a communication from the Malawi Revenue Authority (MRA) stating that VAT will be levied on pension administration charges from 1 September 2020.

“This means that in the future, on the current administration costs paid by your organisation, you will have to add VAT at the rate of 16.5% of the costs to be paid,” the letter reads in part.

Finance Department spokesman Williams Banda said the VAT will only apply to income that fund managers earn from their services.

“Pension administrators charge administration fees for the management of pension schemes; these fees are subject to VAT like any other fees charged on taxable services.

“The general public should note that according to the VAT law, pension contributions do not attract VAT while pension administration costs attract VAT,” Banda said.

But tax expert Emmanuel Kaluluma wondered why such a tax could not be exempted as is the case for the banking and insurance sectors.

“This means that ultimately when they pay that money as VAT they will push it towards the members of the pension fund. However, we are asking why VAT now when the pension fund has always been there Of course, that’s because of the ongoing restructuring.

“In the VAT law, banking and insurance services are exempt from VAT; now why not grant this exemption to pension fund managers, because insurance companies were doing the same work but did not pay VAT ?” Kaluluma asked.


Item Rating