Additional Voluntary Contributions (AVC)

A member can make additional voluntary contributions. The portion of your salary that you contribute to the scheme is normally deducted from your salary before taxation. There however exists a limit to the amount that is tax-free. Presently the limit on contributions is Ksh 20,000 but this is reviewed periodically by the government.

The table below shows the advantages of Additional voluntary contributions (AVC) in relation to tax calculation. For the illustration purposes the three members earn the same salary, Member A makes the mandatory and additional voluntary contributions of five percent (5%), Member B makes only the mandatory contributions, Member C makes no contributions.

 Member A  Member B  Member C
 Basic pay  50,000  50,000  50,000
 Allowances  17,000  17,000  17,000
 Gross pay  67,000  67,000  67,000
 Pension contributions – 5%  2,500  2,500  –
 Additional Voluntary Contributions -5%  2,500  –  –
 Statutory contributions- NSSF  200  200  200
 Non taxable income  5,200  2,700  200
 Taxable Income  61,800  64,300  66,800
 Tax payable -before reliefs  13,144  13,894  14,644
 Net salary  48,656  50,406  52,156