More than 500,000 civil servants will from January 2021 take home a reduced pay with the commencement of deductions for their pension scheme.
The government workers consisting of civil servants, teachers, and disciplined services personnel (National Police Service, Prison Service, and National Youth Service) will contribute 7.5% of their gross salary under the new scheme.
The state will roll out the Public Service Superannuation Scheme where the government will put in 15% as opposed to the initial plan where it catered for the whole amount.
In the new plan, the deductions will be incremental on a yearly basis with the first year 2.5% being deducted before graduating to 5% for the second year and 7.5% in the third year.
“Employees will have the option to make additional voluntary contributions above the mandatory 7.5% of their basic salary.
"Where an employee takes this option, the government will not increase its contribution, the employer will contribute 15% of the employee’s basic salary," Head of Public Service Joseph Kinyua stated on Tuesday, December 9, 2020.
He, however, stated that the current scheme would be closed to new entrants and the accrued benefits for those who join the new scheme will be calculated and paid into the scheme.
Kinyua further noted that state-owned bodies which failed to remit money to the scheme on time would be penalised.
"Accounting officers shall remit employee and government contributions by the 10th day of the next month following the due date.
"Where the accounting officer fails to deduct a member’s contribution, the sum will attract a compound interest at the rate of 3% per month," he added.
For one to be covered, they need to be on permanent and pensionable terms below the age of 45. At the same time, civil servants aged over 45 can also join the scheme.
Records on the current service pension scheme indicate there are 375,000 teachers, 128,000 police and prison staff, more than 270,000 pensioners and 75,000 dependants.
The Pension Savings Scheme, which was introduced yesterday by Treasury Cabinet Secretary Ukur Yatani, and is aimed at reducing the pension burden currently shouldered by the government.
