Government Boosts Pension Flexibility with Lump Sum Expansion

The Government has announced a comprehensive package of reforms aimed at strengthening the country's pension system and improving access to lump sum benefits.

Minister of Labour and Social Security Brenda Mwika Tambaamba, MP, said the reforms are designed to give members greater flexibility and options at retirement, without compromising their long-term income security or the form of monthly pensions that protect retirees from poverty in old age.

the Minsister spoke in Parliament on Thursday. This followed a private members' motion by Kanchibiya member of Parliament Sunday Chanda, who proposed that the government give contributors the option of accessing lump sum payments upon retirement.

Under the reforms, flexibility in lump sum access will be expanded. The current 20% partial withdrawal will be increased to allow access to this amount at retirement as a lump sum, offering a more consistent way of increasing the percentage available beyond 20% to enhance financial flexibility at retirement.

A voluntary sub-scheme will also be introduced, allowing members to make extra contributions beyond the mandatory rate. This would entitle members to access additional lump sum benefits when they retire.

The reforms also address civil servants such as teachers and health personnel employed after 2000 who currently only contribute to NAPSA, ensuring they will be allowed to also contribute to the Public Service Pensions Fund (PSPF).

The government is also encouraging employees in the private sector to either create or join existing occupational schemes under the Pensions and Insurance Authority (PIA), as there are over 230 Private Occupational schemes already providing lump sum options.

Ms. Tambaamba noted that the reforms are based on global best practices and align with International Labour Organisation Convention 102, permitting lump sums under regulated conditions to protect retirees' monthly income.

She emphasized that the reforms are almost complete and will undergo consultation in all provinces before being presented to the Tripartite Consultative Labour Council and finally the Cabinet for approval.

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