The Budget Director Chancy Simwaka was speaking on Tuesday when officials from the Ministry met the Public Accounts Committee (PAC) of the National Assembly.
Simwaka explained that the proposed system will allow employees to contribute towards their pension benefits as opposed to the current pay as you go system.
According to Simwaka those aged 50 above have been exempted and will be under Pension Administrator while those below 50 will be on a contributory arrangement.
He explained that this dual approach in line with the laws will free government from being burdened as already they are many people on the defined pension arrangement adding that Capital Hill cannot afford to pay for the K500 billion.
“It’s extremely expensive for government to migrate everyone to the Defined Contributing System at once because K500 Billion will be required that’s why government intends to go in phases,” said Simwaka.
PAC Chairperson Kamlepo Kalua hailed the interaction the Committee had with the Ministry of Finance as it accorded them a chance to seek clarifications on some issues in the proposed 2015- 2016 Budget.
Among other issues the Committee queried the ministry on some reduced allocations which it noted might affect some of the operations of the various Ministries and departments.
“Other ministries have had allocations reduced and others increased, we don’t see the rationale hence wanted them to explain these anomalies” noted Kalua.
The Ministry of Finance disclosed at the interface that the Pensions allocation has gone up in the proposed Budget with the proposed public service contribution scheme.