Government Intends To Expand Lump Sum Pension Options- Tambatamba

The reforms are designed to strengthen income security and provide workers with more flexibility in managing their retirement benefits.

Ms. Tambatamba indicated that a robust pension system is a critical pillar of Zambia’s social and economic stability hence, there is need to better the reforms to see to it that retirement does not result into vulnerability but provide predictable and financial support after years of work.

Speaking at the National Symposium on Pension Reforms with Employer Federations and the Labour Movement, the Minister emphasized that income security in old age is essential to protecting workers’ dignity and sustaining household and national economic resilience.

Ms. Tambatamba said through coordinated reforms with consultations from stakeholders, the New Dawn Government is addressing hurdles in pension systems such as low coverage, inadequate benefits, delayed payments and fragmented schemes, which have undermined retirees’ financial security.

As part of the reform process, three Bills have been drafted: the National Pension Scheme Bill, 2025, the Public Service Pensions Fund Bill, 2025, and the Local Authorities Superannuation Fund Bill, 2025 to modernize pension laws, harmonize schemes and strengthen governance to ensure reliable and timely benefit payments.

Key reform measures include:

Increasing the NAPSA income replacement rate from 40 percent to 45 percent.

Raising the minimum pension to 25 percent of national average earnings.

The reforms will allow the 20 percent pre-retirement benefit to also be accessed at the point of retirement as a lump sum, while Government explores the possibility of increasing this percentage without compromising the adequacy of monthly pensions or the long-term sustainability of the scheme.

A Second-Tier Pension for Public Workers. such as teachers, police officers 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 Local Authorities Superannuation Fund (LASF).

In addition, Government plans to introduce voluntary additional contributory sub-schemes under NAPSA, the Public Service Pension Scheme Fund (PSPF) and the Local Authorities’ Superannuation Fund (LASF) to enhance retirement benefits that can be accessed as lump sums.

Further, the proposed Public Service Pension Fund reforms aim to increase public service workers’ retirement income by adding an additional 20 percent income replacement ratio to the current 40 percent provided by NAPSA, bringing total income replacement to at least 60 percent, and up to 65 percent with the enhancement of the NAPSA rate.

Ms. Tambatamba said the reforms build on earlier measures introduced in 2022 to improve the cash flow and financial stability for workers such as the reduction of NAPSA penalties and the introduction of partial pre-retirement withdrawals.

She implored social partners to back the reforms, stressing that a strong pension system is fundamental to income security for current and future retirees.

“Pension Reforms is for people of all ages, those about to retire and our young workers. We are planning even for the unborn because they will one day enter the Labour Market and retire, therefore, a strong pension system is indeed a guarantee of dignity and income security,”Ms. Tambatamba said.

The Minister said Government remains committed to delivering a fair, sustainable and responsive pension system that guarantees financial protection for workers long after they exit the labour market.

Ministry of Labour and Social Security Permanent Secretary Zechariah Luhanga in reaffirming Government’s commitment to transparency, said wider consultations have been conducted during the ongoing pension reforms across the 10 provinces, to gather feedback, build consensus, and ensure that reforms reflect the needs of workers, employers, and pensioners across the country.

Zambia Congress of Trade Unions Secretary General Joy Beene proposed that the ongoing pension reforms prioritize improvements in benefit adequacy and protect pension values against inflation, without reducing accrued or expected benefits.

Zambia Federation of Employers president Myra Ngoma said social security system should provide safety nets that support dignity and stability later in life when one is no longer has a steady income after employment.

And Emoluments Commission Director General Chembo Mbula on behalf of the steering committee said the consultative process with employers and employee representatives is intended to build consensus and ensure the pension reforms reflect the realities faced by employers, workers and pension administrators.

He said continued dialogue remains central to finding common solutions that will deliver a fair, sustainable and responsive pension system.