23/07/2025
Is Zambia's Public Pension System Being Undermined? A Closer Look at NAPSA, Political Influence, and the Road Ahead
By Chitundu
Introduction
The National Pension Scheme Authority (NAPSA) has long been the cornerstone of retirement security for Zambia's formal workforce. Created through an Act of Parliament in 1996 (National Pension Scheme Act No. 40 of 1996), NAPSA replaced the outdated Zambia National Provident Fund (ZNPF) and was designed to offer a defined benefit pension system for employees in both the public and private sectors. However, recent policy decisions and economic trends under the United Party for National Development (UPND) government and President Hakainde Hichilema (HH) have raised pressing questions about the stability, independence, and future of this critical national institution.
This article explores the emerging dynamics surrounding NAPSA, the possible political motivations behind recent reforms, and whether Zambia is witnessing the deliberate weakening of its public pension system in favor of private, elite-controlled alternatives.
Historical Context of NAPSA
NAPSA was established in the mid-1990s as a response to inefficiencies in the ZNPF. Under the guiding principles of social security, the NAPSA Act was intended to provide income security to retirees, survivors, and those rendered invalid by circumstances beyond their control. As a mandatory contributory scheme, it built a strong investment base over decades, allowing the fund to participate in national development through real estate, government bonds, and other long-term investments.
It is important to underline that the failure of the Patriotic Front (PF) government to pursue a robust pension reform agenda—beyond small-scale proposals—was largely a consequence of the state’s own chronic failure to remit statutory contributions, especially through local councils and other government institutions. The Zambian government itself has historically been the biggest defaulter in statutory contributions to NAPSA, making its current posture on pension reform appear not only inconsistent but deeply hypocritical.
Recent Developments: Populism or Policy Shift?
One of the most pivotal recent decisions was the introduction of a 20% partial withdrawal scheme, which allowed contributors to access part of their pensions before retirement. While publicly celebrated as a form of economic empowerment, critics argue that this drained NAPSA's liquidity and disrupted its long-term actuarial model.
Compounding this concern is NAPSA's involvement in funding the Ndola-Lusaka Dual Carriageway Project, which has been flagged for cost inflation and lack of clear financial returns. Government-linked institutions, including NAPSA, ZNS, and IDC, have reportedly been compelled to finance this and other infrastructure ventures without sufficient independent oversight or risk evaluation.
Signs of Strategic Undermining
1. Defunding through Populism
The 20% withdrawal policy, while politically popular, compromised NAPSA's capital reserves and long-term sustainability. It mirrored patterns seen in countries that pursued short-term populist gains at the expense of structural integrity.
2. Risky Infrastructure Investment
Public pension funds globally are often used for national development, but only when due diligence ensures ROI. NAPSA's involvement in inflated projects raises concerns of misuse, especially where transparent procurement is lacking.
3. Private Sector Positioning
Allegations have emerged that entities such as Santunia Regina, Africa Life Insurance, and other financial companies have direct or indirect ties to political elites, including those in the UPND administration. If true, this could represent an attempt to weaken the public pension system and funnel citizens into private pension schemes controlled by politically connected firms.
A Western Playbook? The Global Precedent
In countries such as Chile, Mexico, and even parts of Eastern Europe, similar dynamics unfolded:
Governments allowed or orchestrated the deterioration of public pensions.
Crises were manufactured or exacerbated to justify pension "reform."
Private pension providers, often tied to economic elites, stepped in to fill the void, creating a two-tiered system that favored the wealthy.
If Zambia follows this model, the long-term result may be a privatized pension and insurance sector, dominated by elite-owned firms with minimal public accountability.
Political Economy: Elite Capture in Motion?
The convergence of political power and financial influence is at the heart of this unfolding crisis. By allowing state institutions like NAPSA to serve as financial backers for politically convenient projects, while privately affiliated companies grow their market share in insurance and pensions, the government risks undermining its own social safety net.
This isn’t merely about corruption. It reflects a systemic shift toward neoliberal capture, where public goods are gradually stripped of independence, credibility, and function—only to be replaced by market-driven, elite-controlled systems.
Consequences: Toward a Two-Tier Retirement Future
If this trajectory continues:
Working-class Zambians may find themselves trapped in an underfunded, unreliable public pension scheme.
Wealthier citizens and elites will opt into private pensions with better returns, exacerbating inequality.
NAPSA’s legitimacy could erode, triggering a crisis of confidence in Zambia’s entire social protection framework.
Conclusion: Reform or Ruin?
The current trajectory of NAPSA reflects a dangerous convergence of political opportunism, economic ideology, and elite self-interest. While infrastructural development and pension reform are not inherently negative, they must be pursued transparently, strategically, and in the public interest. Zambia's Parliament, civil society, and citizens must demand accountability before the nation’s last bastion of retirement security is hollowed out beyond repair.
The fate of NAPSA is not just about pensions — it is about the future of social justice, economic equality, and democratic governance in Zambia.
Recommended Actions:
Launch a parliamentary inquiry into NAPSA’s investment decisions and family liquidity.
Demand public transparency on the ownership of private pension/insurance firms.
Develop an independent actuarial review to assess the long-term viability of the 20% withdrawal policy.
Engage civil society watchdogs to monitor and expose elite capture within Zambia’s financial systems.
Zambia stands at a crossroads — between protecting public wealth or privatizing the future. The choice, and the consequences, are both historic and urgent.
John 8:32 "And you will know the truth, and the truth will set you free.”
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