Teachers’ Provident Fund Training Commences with TSC and PSSS
Teachers’ Provident Fund Training Commences with TSC and PSSS. The Teachers Service Commission (TSC) and Public Service Superannuation Scheme are educating teachers about the Public Service Superannuation Scheme (PSSS), also referred to as the Provident Fund.
The plan that targets teachers who will be 45 by 2021 and those employed subsequently has started in a number of counties today.
The Public Service Superannuation Scheme (PSSS) was established by the Public Service Superannuation Scheme Act No. 8 of 2012 to offer retirement benefits to Civil Servants, Teachers, and Disciplined Services Personnel.
The Scheme is managed by a Board of Trustees, with the help of a full-time Secretariat and Service Providers.
The commencement date was published by the Cabinet Secretary for National Treasury and Planning in compliance with Section 1 of the PSSS Act, and the Scheme went into effect on January 1, 2021.
Among other things, the Scheme is in charge of advising members of their legal rights and obligations under the Act.
In order to get their pension, teachers and government workers must now contribute to the provident fund.
In order to fund the program, 7.5% of members’ basic salaries are deducted as Provident Fund.
In a defined contribution pension plan, the funding of the plan is financed on behalf of both the employer and the employee.
The Scheme’s operations are regulated by the Retirement Benefits Authority (RBA).
Prior to the Defined Contribution program, which has been fully funded by the exchequer since independence, the government operated a Non-contributory program (Free Pension).
Drawbacks of non-contributory programs (free pensions)
1. The lack of eligibility for a pension or any other benefits makes workers who decide to leave their positions before turning 50 disadvantageous under the plan.
If a participant accepts a job offer from an organization that offers a pension plan, benefits from the plan cannot be transferred to another pension plan.
3. No member may make additional, voluntary payments to the Scheme.
4. The accrued pension cannot be accessed before to leaving.
5. Male officers are subjected to discrimination regarding the marriage gratuity and widowers pension.
A defined contribution plan’s advantages
1. Tax benefits, such as pretax contributions that reduce an employee’s taxable income. The pension contribution is deducted from the base salary before taxes are calculated. Members are qualified for a tax break up to the lesser of 30% of pensionable earnings or Ksh 20,000.
2. A retired officer’s pension is not lost if they quit their job or get fired.
3. The accrued pension may be transferred to a different pension plan of the departing employee’s choice.
4. Employees may elect to make additional optional payments to the plan in addition to the 7.5% of their basic pay that is required by law. When an employee makes this decision, the government won’t boost its contribution.
5.In the event of termination, resignation, illness, mortgage financing, an advance to acquire a primary residence, immigration, or death, members of the plan may receive retirement benefits prior to the specified retirement age.
6. Pension scheme members have the right to access up to 40% of their total accumulated contributions, up to a maximum of Ksh 7 million, for the purchase of a principal dwelling under the retirement benefits (mortgage loans) (amendment) laws of 2020.
Involvement in the defined contribution plan
1. Workers with permanent positions and pensionable lengths of service who will be under 45 on January 1, 2021
2. New recruits starting on or after January 1, 2021, in the federal government
Employees who were 45 years of age or older on January 1, 2021, might decide whether to participate or not. The public service pension plan, which was the former non-contributory pension plan, continued to provide benefits to employees over the age of 45 who made the decision not to join in the plan.
Payments made to the recently introduced Defined Contribution Plan
Following a progressive schedule, the basic wage contribution rate will be 2% in the first year beginning January 1, 2021, 5% in the second year beginning January 1, 2022, and 7.5% in the third year beginning January 1, 2023.
The company contributes 15% of a worker’s base pay. The employer and employee contributions to PSSS, which is a defined contribution plan, are invested to produce income from investments.
The finances are governed by the board of trustees. The male employees have stopped paying into the NSSF and the Widows and Children’s Pension Scheme (WCPS) since the inception of this arrangement.