Teachers to be deducted 1.5 percent housing and 7.5 percent pension

Another Shock Awaits Teachers in July after Uhuru’s 1.5 Percent May Salary Deductions

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In Summary:

  • The government directs all employers to deduct and remit 1.5 percent of all workers salaries starting in May 2019 for the housing scheme.
  • 7.5 percent salary deductions is expected to start from July 2019 for the pension contribution.

Teachers will this time cry all the way from the banks starting from May.
This follows a government directive to all employers to deduct and remit 1.5 percent of all workers salary by 9th of every succeeding month starting from May 2019.

COFEK challenges government deduction of 1.5 percent housing levy.
COFEK rushes to court to challenge Gov’t deduction of 1.5 % housing levy.

Other than the 1.5 percent deductions for the housing scheme, teachers are in for another 7.5 percent salary slash for the pension contribution.

The 7.5 percent salary deduction is expected to start from July 2019.
The pension contribution scheme has been deferred five times since its inception ten years ago.

The government has promised to plunge an amount similar to 15 percent of every civil servant’s monthly pay into the pension scheme.

The 1.5 percent May salary deduction is to be used in funding one of President Uhuru’s Big4 Agenda. The fund will partially finance the housing scheme.

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This housing finance levy is meant to help the Kenyan Government in building the ambitious half-a-million low-cost house units.

The Central Organisation of Trade Unions COTU Secretary General Francis Atwoli has however condemned the Governments intention of deducting workers pay.

COTU went to court seeking an injunction to stop the Government from implementing the deductions. The giant Organization argued that the Kenyan public was not involved in the plan.

Last month the Court gave an extension order barring the Government from touching the workers’ salary for 1.5 percent deductions. The Court, however, did lift the order later on.

The 1.5 and 7.5 percent deductions come in the weight of more levies previously introduced.

The Legislative arm of Government controversially enacted a bill last year in September to collect more revenue from Kenyans.

The bill saw an increase in airtime and internet data charges following an increase on imposed tax. It also ate into the mobile money transfer platforms.
Banks and other financial institutions did not escape either. Over the Counter, OTC and Automated Teller Machines ATM Charges were also increased to factor in the new tax regulations enacted.

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Most teachers are expected to feel more of the Government’s pinch as most live on an extremely tight budget having committed more than two-thirds of their salary into bank and Sacco loans.

The Kenya National Union of Teachers KNUT and Kenya Union of Post Primary Education Teachers KUPPET, have expressed their displeasure with the Government’s levy deduction plans.

KNUT said that their delegates unanimously rejected the deductions of their members’ salaries. They insist that the Government can only make the deductions if the 2017-2021 CBA is comprehensively reviewed. They want the new tax regime to be factored in the CBA.

A Teacher earning an average of Ksh 25,000, is expected to part with Ksh 2,250 for the housing levy and pension deductions.
Those earning between Ksh 25,000 and 50,000 will give from Ksh 2, 250 to 4,500.
Chief Principals earning between 102,000 and 148,000 will have to remit between Ksh 9,180 to 13,320.

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The deductions come in the midst of when the public is demanding for tangible results in the Government’s fight against corruption.

Until the writing of this post, no prominent politician or a senior Government official has been found guilty on charges of corruption.

Do you think the Government is justified to deduct a teacher’s salary? Share your comments below.