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Government and Policy

Civil Servants, Teachers To Take Pay Cut From January

BY Soko Directory Team · August 4, 2020 11:08 am

By Getrude Matayo

More than 530,000 civil servants including teachers will next year in January take a pay cut by 7.5 percent as they start contributing to their pension saving kitty.

The employee attached to ministries and state agencies will see a portion of their salaries sliced for onwards remittance to the soon to be created Public Service Superannuation Scheme (PSSS).

Treasury Cabinet Secretary Ukur Yatani said that the move was aimed at reducing the pension burden currently borne in whole by the exchequer especially during the Covid-19 era that has depleted revenue sources.

Mr. Yatani will on Wednesday set the stage for the setting up of PSSS which will have a board and CEO by announcing the January date when civil servants will start contributing to the fund.

Public servants do not contribute to their retirement upkeep, a move that will increase taxpayers’ pension burden.

This means that state workers will cede about 2.4 billion shillings monthly or 28 billion shillings to the fund that will emerge as Kenyans largest pension scheme.

The pension budget has increased by more than three-fold in the last 10 years from 25 billion shillings in 2008/09 to 86 billion shillings in the 2018/19 financial year.

Part of the pension burden has been attributed to the government failures to push through necessary reforms including kick-starting the contributory pension scheme that was first mooted eight years ago.

The Treasury forecast will need 106 billion shillings in the year starting next July for pension payouts, rising to 153 billion shillings in the year ended June 2022 reflecting a 20 percent raise.

“Membership to the scheme will be mandatory to all entrants upon commencement of the Act and all employees aged below 45 as at the date,” Yatani said

“Employees aged 45 years and above will have an option to join the scheme by completing the Public Service Superannuation Scheme option form” he added.

Civil servants were initially to contribute two percent of their monthly salary to the scheme in the first year, five percent in the second, and 7.5 percent from the third year.

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