ZUFIAW’s submission to Parliament on Bill No. 21 of 2022



The Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) is a Trade Union that represents and protect workers interests and rights in the financial sector and financial related institutions with membership drawn from Banks, Insurance Houses, Micro Finance Institutions, Pension Houses and Regulators.

ZUFIAW is affiliated to the Federation of Free Trade Unions of Zambia (FFTUZ) and Union Network International (UNI). The operations of the Union are driven by our motto of “Workers First” and our values of Integrity, Accountability, Hard Work and Solidarity.

Being the largest Union in the financial sector, ZUFIAW has continued to partner with the Government of the day in driving economic growth and ensuring the challenges faced by workers in the Financial Sector and citizens are addressed timely. By and large, ZUFIAW as a stakeholder has continued to provide credible checks and balances to ensure Government prioritize the interests of the workers and the citizens of this great Nation Zambia.


Following Cabinet’s approval, in principle, of the introduction of a Bill in Parliament to amend the National Pension Scheme Act No 40 of 1996 to provide members of the Scheme an option to access part of the contributions before retirement, the Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) hereby submits the following:

  1. Background to the proposed amendments

The New Dawn Government made a policy pronouncement on the need for a partial access to pension contributions by members of the National Pension Scheme, pursuant to the Republican President’s inaugural address to Parliament. Various stakeholders have highlighted the reduced the lifespan due to GMOs, lifestyles, global pandemics and the challenges faced by retirees in accessing their pension benefits as a reason to reform the country’s social security mechanism, with many former employees failing to access their pension benefits and the families of the principle contributing member often receiving these benefits subsequently. The current high cost of financing in the country with regards to loans and mortgages also makes it extremely difficult for workers to embark on both short to long term personal development projects leaving most of these workers highly indebted thereby affecting productivity in many institutions. The Hon. Minister of Labour and Social Security recently announced that contributing members would only be able to access 20% of their contributions after meeting a certain minimum criteria. However, in its current state, the National Pension Scheme Act No. 40 of 1996, does not allow for the implementation of the policy pronouncement on partial access to pension contributions for members of the National Pension Scheme. In order to implement any such policy pronouncements and amendments, there is need for the National Pension Scheme Act No. 40 of 1996 to be amended.

  • Other Countries implementing partial withdrawal

A ‘one-size fits all’ approach as far as policies on early access to pension savings are concerned is not appropriate. Therefore, there is need for government to analyze how different countries have chosen strategies more appropriate to their circumstances and adopt the most suitable strategy.  Some of the countries where early access (before reaching the legal retirement age) from voluntary schemes is allowed are in New Zealand and Fiji. Voluntary occupational pension schemes, sponsored by employers, allow for some early access in Germany, Singapore, Denmark, Netherland, Sweden, the United States of America and Belgium. Most of these schemes allow for ‘hardship withdrawals’ for medical expenses, education, principal residence purchase, funeral, eviction, and unemployment, subject to payment once a member has reached the threshold limit of 50% of the minimum contribution requirement. The Indian National Pension System Trust allows a subscriber to make a partial withdrawal after joining the NPS and making contributions to the scheme for 10years but not exceeding twenty-five per cent of the contributions made by him/her and excluding contribution made by employer.

  • Impact of Early Withdrawal on Pension Contributions

Most pension schemes that allow for early withdrawal of pension benefits (without repayment, with interest) have experienced lower replacement rates (RR) at retirement, due to the pressure placed on the scheme. Low contribution density is also another area of concern as income from contributions does not always match/ exceed payouts through partial access to retirement benefits. In the event of more current members requesting for partial payment, the scheme shall have difficulties in servicing all exiting members due to limited resources available. This is because most pension schemes invest member contributions in long term assets which mature/ yield benefits after extended periods of time. For the record, as of March 2022 over 58% of the National Pens犀利士 ion Scheme Authority (NAPSA) investments sit with the Central Bank in form of Bonds and other commercial Banks in form of term deposits. In order to achieve this partial payout estimated at K17bn, NAPSA might need to liquidate some of these investments posing a huge risk on the financial system of the Country a situation that might bring far fetching consequences on the recovery, growth and sustainability of the economy. This might also affect the ability of the scheme to pay retirees at the point of exit from employment.

As a trade union, we are also concerned with the welfare of our members both at the Authority and the Banks that might be affected thereof. We have a duty to improve the conditions of service for our members and we strongly feel if this process is not well managed, the employees of the authority particularly our members might be affected negatively.

Early access to benefits always resolve the challenges in the immediate future but does not seek to cure the long term given that contributing members shall require more funds at the point of exit, due to the fact that they usually do not have access to any other income and their benefits shall be paid out less the amount earlier withdrawn. The primary goal of any pension system is to provide adequate, affordable, sustainable and robust retirement income. Pension funds should have a single objective which is to provide adequate pensions to individuals after their working life and should be managed with one portfolio to meet this objective. Stakeholders must therefore, ensure that any amendment to the National Pensions Act take into consideration the welfare of contributing members and delivers a seamless transition of income into retirement.

  • Possible Threats

Possible undesirable consequences to accessing pension benefits early include:

  • Possibilities of reduced pension amounts when one is due to retire as a result of the partial withdraw, and in terms of lump sum, the amounts might be reduced making the retiree worse off.
  • Bad investments due to limited investment acumen may lead to loss of the accessed funds.
  •  Limited funds available for investment and development for pension houses.
  • Low levels of financial literacy and business management.
  • Possibilities of widening the projected actuarial deficit
  • Benefits of early access

Partial withdrawal of pension benefits shall:

  • Enable workers to access funds while they are energetic and have space to take risks.
  • Enable workers to investment in their various immediate and long term projects with exponential growth opportunities over time.  
  • Workers shall be able to access funds for immediate and long term needs such as critical health services and tertiary education, which are significantly costly.
  • Reduce the payment burden on pension houses at the point of exit.
  • Funds can be used to pay off loans that have been serviced at high interest rates
  • Improved productivity among workers after paying off loans which will contribute to the productivity ratio of the Country.
  • More money in circulation giving business opportunities to those in informal employment

Conclusion and recommendation

It is the considered view of the Union, therefore, that the partial withdrawal of pension contributions by members shall benefits workers in that they shall have immediate access to funds at the point these resources are needed. However, stakeholders need to ensure that members are adequately sensitized due to the low levels of financial literacy amongst workers. ZUFIAW has tasked its Informal Sector Desk to provide training, investment opportunities and guidance to Union members that shall opt to access part of their benefits earlier than the legally designated retirement age. We call upon Government to pass laws that compel Employers both in the private and public institutions to have in house pension schemes as a way of safeguarding the future of workers and that of their loved ones. For the record, 90% of our Recognition Agreements with Employers, pension form part of negotiable items demonstrating the Union’s desire to safeguard our members future while they invest for today. We further wish to intreat Government to put safety nets to ensure they achieve the intended purpose of amending the ACT. The Ministry of Labour and Social Security, Employers, Unions and importantly the Ministries of Local Government and MSMEs remain key in ensuring Workers invest the funds through Constituency Development Projects and make available proper sensitization on Business Establishment and Management supported by business investment opportunities made available for workers to invest these funds locally. This creates the need for Government to continue creating a conducive environment to promote small and medium enterprises through policy direction.

The Union’s position on this matter is that ZUFIAW supports the proposed amendment of partial access to retirement benefits, based on the reasons provided above. However, the Union strongly urges Government to ensure the safety measures are in place before implementing the option/s for partial withdraw.

For/On Behalf of the Zambia Union of Financial Institutions and Allied Workers

Kasapo Sundrea Kabende


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