HOW TO CALCULATE A TEACHER’S PENSION
- Commuted Pension Gratuity (Lump sum)
Formula: No. of Months worked × Annual Basic Salary×¼×20
480
- 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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