Teachers are set to suffer a big pay cut as from January next year as they start contributing to a new pension savings scheme. They are among over 530,000 civil servants, including police, who will face take the compulsory deductions.
The money deducted will be remitted to the recently created Public Service Superannuation Scheme. Currently, Civil servants do not contribute to their pension, with their benefits paid straight from taxes.
Treasury Cabinet Secretary Ukur Yatani will tomorrow formally announce the setting up of PSSS, the board and CEO and the January date when civil servants will start getting money deducted for the fund.
The CS says the move was inspired by the Covid-19 pandemic which has seen the country suffer massive revenue losses and is aimed at reducing the exchequer’s pension burden. The fund is mandatory.
Membership to the scheme will be mandatory to all new entrants upon commencement of the Act and all employees aged below 45 as at the date. Employees aged 45 years and above will have an option to join the scheme by completing the Public Service Superannuation Scheme option form.
The Civil servants will deposit about Sh2.4 billion monthly or Sh28 billion to the fund, making it Kenya’s largest pension scheme.