Access Your Pension Early—but at What Cost?

New laws give Zambian workers greater access to their retirement savings. Supporters see an opportunity to build wealth, while critics warn the reforms could leave many with less income in old age.

By MakanDay Staffer

For Lusaka resident Peter Mwenda, withdrawing part of his pension before retirement did more than boost his bank account.

Within a week of applying through the National Pension Scheme Authority (NAPSA) online portal, more than K100,000 had been deposited into his account. Rather than spending the money on everyday expenses, he invested it in building a two-bedroom rental property on land he already owned.

Today, the investment generates rental income and, he says, has transformed his financial situation.

“The 20 percent NAPSA partial withdrawal has given me financial freedom. I no longer have the financial pressure that I had before,” Mwenda told MakanDay.

His experience captures the promise behind Zambia’s latest pension reforms: giving contributors access to part of their retirement savings while they are still economically active, allowing them to invest, start businesses or meet pressing financial needs.

But it also highlights a question that economists and pension experts continue to debate. Will earlier access to retirement savings improve workers’ long-term financial security—or reduce the income available when they eventually retire?

Financial experts say larger withdrawals could require pension funds to hold more liquid assets, potentially reducing the amount available for long-term investments that generate future returns.

That debate sits at the heart of four new pension laws signed by President Hakainde Hichilema on 4 June 2026, reforms the government has described as the most significant overhaul of Zambia’s pension system in decades.

The legislation expands access to retirement savings, restructures public-sector pension arrangements and replaces laws that many experts argue no longer reflected Zambia’s changing labour market.

Government says the reforms are intended to modernise Zambia’s pension system, increase financial inclusion, improve retirement benefits and allow contributors to benefit from their savings while they remain economically active.

Why the reforms matter

For decades, Zambia’s pension system has attracted criticism from retirees frustrated by delayed payments and rigid rules governing access to retirement benefits.

Some former workers died before receiving money they had contributed throughout their careers.

Former employees of the Zambia State Insurance Corporation (ZSIC) say that 127 of about 1,100 former workers died between 1991 and 2019 before collecting their retirement packages. A separate group of former BP Zambia employees reported that 127 of 235 pensioners also died before accessing their retirement benefits.

Those cases became symbols of broader weaknesses within Zambia’s pension system—outdated legislation, delayed benefit payments, governance concerns and investment decisions that critics say undermined confidence in some pension schemes.

What has changed?

President Hakainde Hichilema signed into law four key pieces of pension legislation: the Pension Scheme Regulation (Amendment) Act No. 18 of 2026, the National Pension Scheme Act No. 72 of 2026, the Public Service Pensions Act No. 73 of 2026, and the Local Authority Superannuation Act No. 74 of 2026. Among the most significant changes is the expansion of pre-retirement access to pension savings, allowing eligible contributors to access a larger portion of their benefits before reaching retirement age.

Contributors who previously qualified to withdraw up to 20 percent of their accumulated benefits may now access an additional 10 percent during the final three months before reaching retirement age, bringing the maximum pre-retirement withdrawal to 30 percent.

For example, a contributor with K500,000 in accumulated pension savings who has already withdrawn 20 percent would, under the new law, become eligible to withdraw a further 10 percent during the final three months before retirement, subject to meeting the legal requirements.

The reforms also establish a two-tier pension arrangement for many public-sector employees, allowing civil servants and local authority workers to contribute to both NAPSA and their respective occupational pension schemes.

This means many public-sector employees will contribute both to NAPSA and to an occupational pension scheme, allowing them to receive retirement benefits from two separate sources.

A bigger role for NAPSA

NAPSA remains Zambia’s largest pension fund, managing assets worth more than K113.5 billion and receiving annual contributions of approximately K10.4 billion, NAPSA Director General Muyangwa Muyangwa said during a media engagement in Lusaka on 4 March 2026.

Since introducing the 20 percent partial withdrawal in 2023, the authority says it has paid more than K10 billion to 487,389 eligible contributors, including almost 77,000 women and more than 104,000 young people.

Supporters say those figures demonstrate strong demand for earlier access to retirement savings.

The popularity of the 20 percent partial withdrawal suggests many contributors faced financial pressures long before retirement. But it also raises a broader question: are workers using pension savings to build wealth, or simply replacing income lost to the rising cost of living? The answer could determine whether the reforms ultimately strengthen or weaken retirement security.

Opportunity—or risk?

Economist Noah Kabwita believes the reforms provide contributors with opportunities that traditional lending institutions often cannot.

“Banks have many conditions and borrowing is expensive. These reforms give workers an opportunity to access capital that they can invest while they are still productive,” he said.

Kabwita argues, however, that the reforms will succeed only if contributors use the money wisely.

“Financial literacy is important. Many highly educated people retire without knowing how to manage investments and end up returning to work because they cannot sustain themselves.”

He also cautions that pension funds themselves must invest prudently.

“Some pension schemes have not invested aggressively or wisely enough. Poor investment decisions ultimately affect contributors.”

University of Zambia economist Abson Chompolola agrees that earlier access to pension savings can strengthen household finances, provided pension funds continue investing in productive assets that generate sustainable returns.

Not everyone is convinced

Economist Esther Banda believes the reforms could stimulate economic activity by increasing household cash flow, but warns that contributors should not overlook the long-term consequences.

“The reforms can stimulate retirees’ economic activities, but the risk is that their retirement package becomes smaller and their monthly pension may be lower.”

She adds that the reforms come at a time when the cost of living continues to rise.

According to Banda, a Lusaka family of five required about K8,500 to meet basic monthly needs in 2021. Today, she estimates that figure has increased to around K12,000.

“In that environment,” she said, “many people may feel compelled to withdraw their savings simply to cope with current living costs.”

Governance concerns

While economists debate the substance of the reforms, governance advocates have questioned how Parliament passed them.

ActionAid Zambia Executive Director Faides Tembatemba argues that Parliament had insufficient time to scrutinise the 77 Bills considered before dissolution.

“Documents were huge to internalise in such a short period. MPs were fatigued and already in campaign mode.”

Public finance researcher Robinson Nakambo shares similar concerns.

“The fact that Members of Parliament had to sit until late at night is itself evidence that the legislative process was rushed.”

University of Zambia economist Abson Chompolola disagrees.

He argues that governments are free to amend laws whenever circumstances require and says the timing alone should not determine whether legislation is judged on its merits.

The bigger question

The pension reforms seek to address long-standing frustrations by giving contributors greater flexibility while modernising Zambia’s retirement system.

Whether they ultimately succeed, experts say, will depend on three factors: whether contributors invest rather than spend the money they withdraw; whether pension funds continue generating sustainable investment returns; and whether regulators maintain strong governance while safeguarding contributors’ long-term savings.

Whether the reforms become a catalyst for wealth creation or a source of reduced retirement incomes will depend not only on government policy, but on the financial decisions made by every contributor who chooses to access their savings early.

Right of Reply

MakanDay sought comment from the NAPSA and relevant government officials over a period of more than one month. The reporter first contacted the Ministry of Labour and Social Security, which had established the committee responsible for the pension reforms.

Ministry Public Relations Officer acknowledged the request and repeatedly indicated that feedback would be provided, but no substantive response was received despite several follow-ups.

The reporter also contacted Labour Commissioner Givens Muntengwa, who referred the inquiry to Permanent Secretary Zechariah Luhanga. However, despite repeated telephone calls, the Permanent Secretary did not respond. As no official response was received by the time of publication, the story was published without their comment.

The author is a talented journalist. He is currently on a three-month paid internship at MakanDay after he emerged second in the prestigious 2025 MakanDay Media Awards.

Editor’s Note: The image accompanying this story is AI-generated and is used for illustrative purposes only.