By Chisomo Phiri
A call has gone to government to abolish a Contributory Pension Scheme (CPS) which came into effect in 2017.
Speaking at a press briefing at Amaryllis Hotel in Blantyre on Friday,Chairperson of ‘Young Concerned Civil Servants on Contributory Scheme’ Samuel Chaoloka described the scheme as discriminatory in nature as it does not allow employees above 35 years to benefit.
“As concerned civil servants, we are against this contributory pension scheme. It is not good. Why is it that it does not include everyone to benefit. We want government to remove this pension scheme,” said Chaoloka.
He blamed the government for implementing the contributory pension scheme without consulting civil servants and hear their views.
“The government missed a very important step. It could consult the civil servants and hear their views before start implementing this scheme. We were not consulted but rather forced into the scheme, ” he said.
The grouping chairperson indicated that they consulted the government officials, Malawi Congress of Trade Union (MCTU), and old Mutual to review the scheme but nothing worked out.
He urged government to only use one Defined Benefit( DB) type of pension scheme which he said is not discriminatory in nature.
” We want government to only use Defined Benefit type of pension. It is good and every civil servant enjoys it,” he said.
Under the Contributory Pension Scheme (CPS), an employee contributes a minimum of 5% of the pensionable emoluments while the employer contributes at least 10% of the employee’s pensionable emoluments.
Contributions by the employer are tax deductible up to a maximum of 15% of the employee’s pensionable emoluments while those made by the employee are not.
Upon withdrawal, through retirement, all the benefits are exempt from income tax.
This is applicable whether they are received as a lump sum or as an annuity.