Government moves to reform pension system, expand access to lump sum

Government has announced a comprehensive package aimed at strengthening Zambia’s pension system and improving access to lump sum benefits, while maintaining the sustainability of the National Pension Scheme Authority (NAPSA) and ensuring income security for retirees.

Minister of Labour and Social Security, Brenda Tambatamba, said the reforms were designed to give members more flexibility and options at retirement, without compromising their long-term income security through monthly pensions that protect retirees from poverty in old age.

Tambatamba was speaking in Parliament on Wednesday in response to a private member’s motion moved by Kanchibiya lawmaker Sunday Chanda, who proposed that government reform the NAPSA retirement benefit structure to give contributors an option of accessing lump sum payments upon retirement.

Among the key proposed measures is increased flexibility in lump sum access. The current 20 percent partial withdrawal benefit would be expanded to allow members to access the amount at retirement as a lump sum.

“Government is also considering increasing the percentage beyond 20 percent to enhance members’ financial flexibility at retirement,” Tambatamba said.

She added that another measure would involve introducing a voluntary sub-scheme under NAPSA to allow members to make extra contributions beyond the mandatory rate.

Tambatamba said these additional savings would entitle members to access extra lump sum benefits upon retirement.

The Minister further announced the introduction of a Second-Tier Pension for Civil Servants.

“Civil servants such as teachers and health personnel employed after 2000 who currently only contribute to NAPSA will be allowed to also contribute to the Public Service Pensions Fund (PSPF), while workers under local authorities and utility companies will contribute to the Local Authorities Superannuation Fund (LASF),” she said.

Tambatamba explained that this would create a two-tier system, where NAPSA serves as the first pot and PSPF or LASF as the second, enabling civil servants to access up to 40 percent lump sum benefits.
Other measures include the promotion of Private Occupational Schemes.

“Government is encouraging employees in the private sector to either create or join existing occupational pension schemes under the Pensions and Insurance Authority (PIA), as over 230 private occupational schemes already provide lump sum options for employees,” she said.

Tambatamba emphasized that the reforms were anchored on sustainability and global best practices, in line with International Labour Organisation (ILO) Convention 102, which permits lump sums under regulated conditions to protect retirees’ monthly income.

She disclosed that the reforms were nearing completion and that government would undertake further consultations in all provinces before presenting them to the Tripartite Consultative Labour Council (TCLC) and ultimately to Cabinet for approval.

“Our goal is to build a pension system that is inclusive, sustainable, and responsive to the needs of all Zambians,” Tambatamba said.

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