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Teachers, police blocked from early pension access in reforms
Recruits in a parade during a past pass-out ceremony at Kenya Police College Kiganjo. The government wants to restrict police and teachers' early access to retirement benefits.
Civil servants, including tutors employed by the Teachers Service Commission (TSC), police officers, and employees of the National Youth Service (NYS), will no longer have unrestricted early access to their retirement benefits as the State moves to align withdrawal rules with the rest of the civil servants.
The government, through National Assembly Majority Leader Kimani Ichung’wah, has proposed amendments the Public Service Superannuation Scheme Act to align it with regulations set out in the Retirement Benefits Act.
Currently, civil servants in the Public Service Superannuation Scheme Fund (PSSF) can access all their retirement benefits before reaching the retirement age of 50, but only after leaving employment.
The amendment will limit early withdrawals by the civil servants to no more than 50 percent of accrued benefits and the investment income.
“The Principal Act (Public Service Superannuation Scheme Act) is amended by repealing Section 26 and replacing it with the following new section: “A member may access accrued retirement savings on leaving employment before retirement in accordance with the Retirement Benefits Act”,” read the new proposals.
The resolution to block unfettered access to retirement benefits is intended to promote adequate retirement savings for members.
The Public Service Superannuation Scheme Act currently allows members to withdraw their contributions and accrued interest in full on leaving employment for reasons other than retirement.
Members also have access to the aggregate of any additional voluntary contributions made to the scheme, together with accrued interest.
Single window withdrawal
As of the end of the financial year in June 2024, the PSSF had 442,929 members 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 was part of government reform initiatives in the pensions sector which aim to encourage members of the public service make contributions towards their retirement.
Previously, the government made all pension contributions on behalf of its civil servants, which put pressure on the exchequer.
Civil servants now contribute 7.5 percent of their gross salaries to the fund, and the government matches this at a rate of 15 percent of the civil servants’ gross salaries.
Employees aged 45 or under at the start of the PSSF operations and new hires were required to make mandatory contributions to the fund.
Those aged above 45 at the start of the fund had the option to join the new contributory scheme.
In March, the regulator proposed dropping the provision allowing for partial access to retirement benefits, but later abandoned the quest after pushback, particularly from the youth.
RBA said that the provision had eroded retirement savings, leaving retirees with inadequate funds upon retirement.
Data from the Kenya National Bureau of Statistics (KNBS) showed that 708,902 out of 869,338 persons above the age of 60 were in active employment, representing 81.5 percent of senior citizens in the country.
Workers retain a single window of accessing all retirement benefits before hitting the age of 50 on the grounds of ill health or if relocating from the country.
“A member may opt for payment of the total amount of the vested accrued benefits before attaining the retirement age on grounds of ill health, to the extent that it would occasion their retirement,” RBA says.
