Malawi Congress of Trade Unions (MCTU) has rejected Treasury’s proposal to introduce tax on pensions and death benefits, saying the measures amount to double taxation and violates the principle of income security in old age. MCTU has since demanded alternative revenue measures that target wealth, tax evasion, illicit financial flows and high-income earners, rather than retirees and grieving families who mostly have pension and death benefits respectively as their only source of income. In a statement made available to The Nation and signed by secretary general Charles Kumchenga and president Kelvin Chifunda last evening, MCTU argued that the proposed tax reforms contradict Malawi’s constitutional and international obligations, including International Labour Organisation’s Convention No.
95 on protection of wages. They also argued that the proposed reforms run contrary to the principles of fair taxation, social justice and the protection of vulnerable groups, as they will erode earned benefits, undermine labour justice, deepen poverty and consequently worsen inequality. Reads the statement in part: “Salaries, pensions and death benefits are earned social and economic entitlements, not discretionary income.
“MCTU would like to emphasise that the proposal to tax pensions and death benefits weakens confidence in the pension system; discourages long-term savings and formal employment and undermines workers’ trust in government-led social security reforms.” MCTU noted that already, Malawian workers are facing serious challenges, including pay as you earn (Paye) and multiple statutory deductions before wages, rising costs of basic necessities that outpace wage growth and poverty wages that fall far below a living wage. “It is, therefore, our strongest view that the proposed tax reform will push retirees into poverty and dependency, thereby contradicting national commitments under the Malawi Vision 2063 to social protection, dignity, and decent living in old age,” read the statement in part. With regard to the taxation of death benefits, MCTU argued that it is widely acknowledged that such benefits are paid to widows, orphans and dependents to replace lost income, cover funeral and immediate survival costs and prevent destitution and the social collapse of affected families.
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MCTU has since called for mandatory consultation with social partners, through the Tripartite Labour Advisory Council on all issues affecting workers and employment. Last week, the Institute of Chartered Accountants in Malawi (Icam) also urged Treasury to protect pension funds from multiple taxation. In his presentation at the 2026/27 pre-budget consultation in Blantyre on Wednesday, Icam president Daniel Jere argued that pension is contributed from after-tax earnings and that the funds are also taxed on investment income; adding that taxing pension receipts on withdrawal or payment to beneficiaries is tantamount to multiple taxation.
When contacted last evening, Treasury spokesperson Williams Banda said there were no such proposals to tax pensions and death benefits and wondered where MCTU and others were getting the information from. However, the Economics Association of Malawi last week indicated having received a request from Ministry of Finance, Economic Planning and Development to provide input on several proposals, including taxation of death benefits and pensions receipts.
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