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Pension uptake in Zambia remains low – PIA

• Pension uptake in the country remains very low.
• The sector currently contributes around 5 percent to GDP.
• Service providers must play a critical role in providing a compelling motivation for employers to set up occupational pension schemes.

Pensions and Insurance Authority (PIA) has disclosed that Pension uptake in the country remains very low with only 246 registered private occupation schemes out of thousands of employers countrywide.
Speaking during the launch of the 2022 Pensions Awareness week, Authority Acting Registrar Namakau Ntini stated that the sector currently contributes around 5 percent to the Gross Domestic Product (GDP), yet there is potential to increase the ratio.

Ms. Ntini challenged service providers to play a critical role in providing a compelling motivation for employers to set up occupational pension schemes.

“I need not over emphasize that occupational pension schemes are an integral part of the social security system which guards against destitution in retirement. Further pension funds can help to build a strong financial system through long-term investments that are important in building a resilient economy.”

“It is therefore my hope that forums such as this will help us come up with strategies to effectively develop the pensions sector,” Ms. Ntini said.

She also noted that majority of citizens are still not sure of how a pension works, while public confidence in pensions is also still low following historical challenges such as late payment of benefits and in some cases pension benefits being inadequate.

“These challenges coupled with legislation that is not reflective of market developments, continues to negatively impact the industry. It is against this background that the Zambia Association of Pension Funds with support from the Authority launched the Pensions Awareness Week Campaign in 2018.”

“The campaign aims to increase public understanding and engagement on pensions as a key financial product. At its core, the Pensions Awareness Week is about the people. We understand that pensions can sometimes feel far-fetched and that is why we set out to create a campaign that provides meaningful and practical help to assist individuals understand the pensions subject,” she stated.

And officiating at the event, Ministry of Labour and Social Security said government wants to establish a very comprehensive, predictable and sustainable pension system that covers many areas including the informal sector.

Ministry’s Assistant Director for Social Security Victor Chikalanga, said government is currently undertaking a number of pension reform measures such as partial withdrawal of benefits and the National Pension Scheme Authority (NAPSA) Amendment Bill 2022, which aims to reduce the penalty rate from the current 20 percent to 10 percent.
Mr. Chikalanga explained that recently, government issued Statutory Instrument (SI) number 72 of 2019 to establish a sub -scheme for the informal economy because over 70 percent of the labour force falls under this bracket.
“Obviously over 70 percent of our labour force is the formal economy and I think we have a very significant informal economy in this country and these are people who need to be given some predictable and sustainable social security and as government we feel duty bound to ensure that we put in place measures to have some form of predictable social security,” Mr. Chikalanga stated.
He further revealed that government also issued SI number 13 of 2021 meant to allow domestic workers to also be registered under Workers Compensation Fund Control Board for them to be covered under employment injury and disease compensation.
And Zambia Association of Pension Funds (ZAPF) Chairperson Catherine Makala said the objective of the National Strategy on Financial Education which government has continued to implement is for Zambians to have improved knowledge, understanding, skills, motivation and confidence to help them secure positive financial outcomes.
“One of the positive financial outcomes that can be attained is improving the culture of saving among citizens, especially long –term saving through pension plans,” Ms. Makala said.
The 2022 Pensions awareness week which runs from 7th to 12 November, is being commemorated under the theme: “Retirement is coming, are you ready?”

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