The Teachers Service Commission, TSC, has implemented a new deduction on teachers’ payslips.
The new savings scheme dubbed Provident Fund, will have a 2% monthly payroll deduction from teachers’ salary. Essentially, the Provident Fund serves as a pension fund.
The scheme involves employees aged 45 years old and below.
The main objective of this deduction is to provide employees with lump sum payments upon leaving their service. In contrast, pension funds provide retirees with both a lump amount and monthly payments.
Both gratuity and provident funds are paid out in one large sum to employees when their employment comes to an end.
A pension fund operates as a defined benefit plan, while the Provident Fund functions as a defined contribution plan.
The scheme will encompass all employees of the Public Service who are recruited through;
- The Public Service Commission (PSC)
- The Teachers Service Commission (TSC)
- The National Police Service Commission (NPSC)
- Any other service that the government deems to be part of the public service for the purposes of the Act.
Teachers and other government workers will each put in 7.5% of their monthly basic pay into the new contributory pension scheme, with the government matching that amount up to 15%.
The first year (2021) only requires a 2% contribution from teachers to help relieve the financial burden. Contributions from teachers will rise to 5% of basic pay in the second year (2022), and 7.5% of pay in the third and subsequent years.
Widows and Children’s Pension Scheme (WCPS) contributions have been suspended to compensate the deduction under the new pension scheme, providing temporary relief for male tutors .