TEACHERS’ 7.5% PSSS PENSION SCHEME; THIS IS WHAT KUPPET SAID
The Kenya National Union of Post Primary Education Teachers, KUPPET has responded to claims about the impending 7.5% pay cut for teachers and other civil servants for the Superannuation pension scheme.
From where KUPPET stands, the government should be cautious to ensure a smooth transition from the old scheme to the new one.
The new scheme which targets teachers and civil servants on permanent and pensionable terms was initially meant to be staggered for three years but from Ukur Yatani’s announcement, it is certain the scheme will be rolled out in January 2021.
As opposed to the current pension where the government pays the full amount, in the new scheme both the employer and the employee will contribute an equal share.
KUPPET’s FULL STATEMENT ON THE 7.5% PAY CUT FOR TEACHERS’ PENSION SCHEME
Following the announcement about the upcoming superannuation pension scheme, KUPPET secretary-general Akello Misori issued a press statement as follows
“Following the Government’s intention to operationalize the public service superannuation scheme, PSSS, KUPPET will give its views to the Teachers Service Commission, education ministry, and the treasury at the appropriate time.”
The PSSS has been in the planning for many years. It aims at shifting civil servants from the current plan dubbed Defined Benefits Contribution System, DCS.
Under the current plan, retired teachers earn a guaranteed pension based on the teachers’ last income in service and the length of service.
The Commission shoulders the responsibility of funding and investing money in the plan. Upon retirement, a teacher gets a one-off gratuity and monthly pensions based on individual calculations.
The main challenge however is the fact that the government does not invest in pensions. They are paid from the exchequer, tax revenues, hence posing a major challenge in accessing pension in time after retirement.
Secondly, teachers who choose to retire before the set age, 60 years cannot access their pensions when they need it most.
Under the PSSS, both the employer and employee contribute the given amounts known as a match to a pension scheme which is invested in a market and generates interests at market rates.
A retiring employee has the right to withdraw his or her savings plus interest irrespective of the number of years worked.
The two plans, therefore, have pros and cons, varying levels of stability, flexibility, and earning at retirement.
For purposes of stability and in full conformity to PSSS Act 2012, the union proposes that employees who have served for long under the current system be guaranteed their pension at current salary scales.
Those who have worked for a shorter period will be facilitated to transition from the current DBC to DCS based on their anticipated current pension estimates.
Bearing in mind that public servants are currently entitled to their pensions after 10 years of service, the union will engage the government machinery to ensure that due consideration is given to transitional mechanisms since existing regulations on retirement would cease to apply.
The Kenyan government has tried to introduce the PSSS scheme for the last 13 years in vain. The new scheme will be mandatory for newly employed civil servants and those below 45 years.