HOW TO CALCULATE A TEACHER’S PENSION

1. Commuted Pension Gratuity (Lump sum)

Formula: No. of Months worked × Annual Basic Salary×¼×20

                                480

2. Reduced monthly pension

Formula: No. of Months worked × Annual Basic Salary×¾×1/12 

                                480

TAXATION

• Any lump sum pension exceeding Ksh.600, 000 is subject to taxation as per the existing KRA tax rates of 10% to 30%.
• A monthly pension exceeding Ksh.20, 000 is also taxable at existing KRA tax rates.
• Retirees aged 65 years and over are not taxed.

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