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Local fund managers battle for civil servants’ pension billions
Civil servants aged 45 or less at the start of Public Service Superannuation Scheme Fund (PSSF) operations along with all new hires were required to make mandatory contributions to the fund.
Local fund managers are caught in a race to control billions of shillings held in the Public Service Superannuation Scheme Fund (PSSF), a pension scheme catering to new employees in the civil service.
PSSF, which commenced operations in January 2021, is a defined contribution scheme under which civil servants pay towards their retirement benefits topped up by Exchequer contributions.
It covers civil servants, tutors employed by the Teachers Service Commission (TSC), and disciplined services personnel, including the Kenya Police Service, Kenya Prisons Service, and the National Youth Service.
PSSF on Tuesday invited bids for fund managers to oversee its investment portfolio for at least the next three years.
The fund is at the same time seeking to secure pension scheme custodians to cover the same three-year period from July 1, 2025.
GenAfrica Asset Managers Limited has been the sole fund manager for the PSSF over the last three years while the custodians have been NCBA, Stanbic, and Cooperative Bank.
The opening up of the roles will see more than 40 licensed fund managers battle GenAfrica for a piece of the civil service pension billions while some 35 commercial banks are expected to rival the three incumbents to be custodians of the PSSF assets.
PSSF’s asset base/investment portfolio closed the year to June 2024 at Sh140.2 billion but has since grown to near the Sh200 billion mark as of the end of February 2025, according to fresh disclosures by the fund.
Nearly three-quarters of the investment portfolio was held as Treasury bonds or Sh100.3 billion as of June 30, 2024, while Treasury bills were valued at Sh24.8 billion, making up 18 percent of the fund’s investment portfolio.
The PSSF’s other assets are invested in diverse investment classes including call and fixed deposits (Sh9.8 billion) as of June 30, 2024), equities (Sh4.3 billion), and Eurobonds (Sh2,1 billion).
PSSF ended its last financial year with a membership of 442,929 and 137 active employers.
The scheme commenced operations in January 2021 as a defined contribution retirement benefits fund under the Public Service Superannuation Scheme (PSSS) Act of 2012.
The establishment of the PSSF is part of government reform initiatives in the pensions sector which seek to have members of the public service make contributions towards their retirement.
The government previously made all pension contributions on behalf of its civil service, increasing spending pressures on the exchequer.
Civil servants contribute 7.5 percent of their gross salaries to the fund while the government matches the contribution at the rate of 15 percent of the civil servants’ gross salaries.
Civil servants aged 45 or less at the start of the PSSF operations along with all new hires were required to make mandatory contributions to the fund. Workers aged above 45 were meanwhile given the option to join the contributory scheme.
Local fund managers have had the luxury of managing most of the sector’s pension billions by overseeing the investment portfolio of the two top schemes in the country.
British-American Asset Managers Limited, Gen Africa, Old Mutual Asset Managers, Africa Alliance, Sanlam Investment, Co-op Trust, and CIC Asset Management Limited for instance managed Sh348.6 billion in assets on behalf of the National Social Security Fund (NSSF) as of June 2024.
