In accordance with the Kenyan government, the Teachers Service Commission, or TSC, has implemented a new deduction on teachers’ payslips.
Teachers will contribute 2% of their monthly salaries via the Provident Fund deduction to the new savings program.
In literary context, “provident fund” is another name for “pension fund.”
The ultimate objective of the deduction is to offer lump-sum payments to employees at the time of their exit from service. This differs with pension funds, which include both lump sum and monthly pension payment components. Although both types of funds involve lump sum payments at the end of employment, there are differences between gratuity and provident funds. Pension funds operate as defined benefit plans, whereas provident funds are defined contribution plans.
Government employees (including teachers) will contribute 7.5% of their monthly basic salaries to the new contributory pension plan, with the employer matching that amount with 15%.
To make the burden lighter for teachers, they will contribute only 2% of their basic pay in the first year (2023).
In 2023 (the third year), teachers will contribute 5% of their basic pay while the full 7.5% deduction will be effected as from the third year (2023).
Men have a reprieve, at least for now, as the deduction under the new pension scheme has been taken care of by stoppage of the the Widows and Children’s Pension Scheme (WCPS) contributions.
WHO WILL BE COVERED BY THE NEW PENSION SCHEME?
The scheme will cover all employees of the public service who are recruited through:
- the Public Service Commission, PSC;
- the Teachers Service Commission, TSC;
- the National Police Service Commission, NPSC, or
- any other service that the Cabinet Secretary determines to be a public service for the purposes of the Act.
The scheme will be mandatory for all employees aged below 45 years.