Blow to teachers as free pension is scrapped

By Sam Otieno

The Government has scrapped free pension for teachers and instead announced a new scheme under which they will contribute 7.5 per cent of their monthly salary beginning July.

The scheme is mandatory for teachers under 45 years, although those older are free to join.

The Government has also scrapped a number of pension funds, such as those targeting teachers’ spouses and their children.

But the Government relaxed the terms under which teachers can access pension. Their retirement age has also been revised to 60 from 55 years, to conform to new stipulations for the Public Service.

The changes are as a result of pay and benefit reforms in the Public Service, and the introduction of a funded contributory pension scheme.

Also to be affected by the new regulations are new employees joining the service and those aged 45 as of June 30.

There are 245,000 teachers employed by the Teachers Service Commission (TSC), although the proportion of those below 45 years could not be immediately confirmed.

The membership to the scheme, however, would be optional for all teachers currently in service who are above 45.

Teachers in this category are expected to choose their option within two months by completing the Public Service Superannuation scheme.

"Any teacher above 45 years who will not have exercised the option by June 30 shall be deemed to have opted to remain in the old pension scheme under the Pension Act Cap 189," said TSC chief executive Gabriel Lengoiboni. Completed forms must be listed and delivered to the TSC by the District Education Officers no later than July 10.

Mr Lengoiboni said those who choose to join the contributory scheme would be required to pay in three phases. The employer would be required to pay 15 per cent of the teachers’ monthly basic salary.

The teachers will be required to pay 2.0 per cent of their monthly salary in the first year, 5.0 per cent in the second year, and 7.5 per cent in the third year.

"Teachers on release to other institutions who are currently required to pay 31 per cent towards their pension will also be required to make their options known," said Lengoiboni.

But teachers serving on contract terms and those on temporary terms of service are not eligible to join the scheme. Those currently serving on extension after having attained the age of 55 are also excluded.

The introduction of the new scheme will mark the exit of the contributions to the Widows and Children’s Pension Scheme (WCPS)

Under this scheme, those married contributed 2.0 per cent of their basic salary to the fund, which in turn entitled teachers’ kin to monthly pension for a period of five years and a lump sum gratuity.

"Refunds for WCPS will be made as stipulated in the Widows and Children’s Pension Act Cap 195," said Lengoiboni in a circular.

The marriage gratuity currently payable to female teachers who resign on marriage grounds will also be scrapped with effect from July 1.

Under this scheme, teachers who resign will be given a portion of the pension as long as one puts in at least five years of service.

However, the Government’s contribution and accrued interests will be retained until the employee retires from Government employment, with benefits payable in line with the provisions of the Retirement Benefits Act.

The new scheme provides more access to the employers’ contribution. An employee can access the employer’s 50 per cent contribution after five years of service. After six years, they can access 60 per cent and 100 per cent after 10 years.

"It is important to note that for the employee to access Government contribution at a rate of 100 per cent, then employee must have contributed to the new scheme for a minimum period of 10 years," said Lengoiboni.

Where a teacher is dismissed or resigns from the service before completion of five years vesting period, they will not be eligible for the Government contribution.

"However, the teacher will be eligible for his/her full contribution for the period served under the new pension scheme, including any interest that had accrued from their contributions," said Lengoiboni.