Teachers, Civil Servants to Suffer 7.5pc Pay Cuts from January – Kenyan Business Feed

Over 530,000 civil servants, including police and teachers, will in January see a 7.5pc salary pay cut as they start contributing to a new pension savings scheme.

The money deducted will be remitted to the soon to be created Public Service Superannuation Scheme (PSSS). Currently, Civil servants do not contribute to their pension, with their benefits paid straight from taxes.

On Wednesday, Treasury Cabinet Secretary Ukur Yatani is set to 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,” said a Treasury brief on the fund. “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.

“Benefits accrued prior to joining the new scheme shall be recognized in the form of an amount acknowledged through the issuance of a letter recognizing accrued benefits at the date of joining the scheme under this Act,” said the Treasury brief.

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