'Pension to be tax-free from next year,' President Ruto announces

President William Ruto has announced that pensions and gratuity payments for workers both in the private and public sectors will be tax-free beginning the next financial year.

This reform measure, the President explained, is proposed in the Finance Bill 2025 in recognition of the service and sacrifice of workers in their active years, and a step towards ensuring that they retire in dignity.

Speaking at Uhuru Gardens Stadium, Nairobi, during this year's Labour Day celebrations on Thursday, he expressed the government's commitment to workers' welfare.

To improve workers’ take-home pay, President Ruto said employers will now be required to apply eligible tax reliefs and exemptions directly when calculating Pay As You Earn (PAYE), a significant shift from the current system where such reliefs have to be claimed from the Kenya Revenue Authority (KRA).

In response to Central Organisation of Trade Unions (COTU) Secretary-General Francis Atwoli's complaint that some employers have not effected a 6 per cent minimum wage increase awarded in 2024, the President directed the Ministry of Labour to ensure that the employees are awarded what they deserve without discrimination.

"It's unacceptable for employers not to implement the minimum wage increase. The Ministry of Labour should ensure the issue is addressed," President Ruto said.

Meanwhile, the President said the government has made significant progress in addressing the long-standing shortage of teachers by hiring 76,000 in the past two years and an additional 20,000 tutors set to be hired in January 2026.

He pointed out that his administration has significantly reduced the teacher shortage that stood at 116,000 in 2022.

“We have set aside Ksh.2.4 billion to hire an additional 20,000 intern teachers starting January 2026,” the President announced.

He also pointed out that the government has allocated Ksh.1.6 billion for the capacity building of teachers and another Ksh.1 billion for promotion.

“These investments have improved student-teacher ratio, enhanced literacy and numeracy outcomes, and created stable employment in communities across the country,” he said.

Furthermore, President Ruto assured Kenyans of his commitment to taking the country to the next level in terms of development.

He said it was time leaders focused on service delivery, noting that elections are two years away.

"We can't make progress as a country if we don't make the right decisions. I want to promise the people of Kenya that I will always make the right decisions to change the destiny of this country," he said.

Prime Cabinet Secretary Musalia Mudavadi praised President Ruto's efforts in transforming the country, saying Kenya is the largest economy in East and Central Africa.

"We should all know that the biggest threat to a nation is not terrorism, but the collapse of institutions. Our institutions have been solid because of the good leadership of President Ruto," he said.

Labour Cabinet Secretary Alfred Mutua called for an end to sexual harassment at the workplace, urging managers to foster safe and respectful environments for all employees.

Mutua said his office has received numerous complaints about harassment, warning that the unethical trend must stop.

The CS stressed the need to discourage inappropriate conduct and explicitly urged managers to stop engaging in sexual relationships with junior staff.

COTU Secretary-General Francis Atwoli urged Kenyans to embrace peace and unity and refuse to entertain any efforts to bring discord among Kenyans.

He said residents in some parts of Africa, including Goma in the Democratic Republic of Congo, are undergoing untold suffering due to instability.

"As Kenyans, we must guard the peace we are enjoying for the sake of prosperity," he said.

The COTU boss urged employers to implement President Ruto's directive on the 6 per cent wage increase in last year's Labour Day celebrations.