The Public Service Superannuation Scheme (PSSS) fund value has hit a record Sh142.2 billion in three years of its operation, solidifying its position as the second-biggest pension scheme after the National Social Security Fund (NSSF).
This means the PSSS fund value had grown by 40.79 percent since December 31, 2023, when it stood at Sh101 billion. Comparatively, the value of pension cash held by NSSF stood at Sh402 billion in the year ended June 2024, buoyed by new higher deductions, having grown from Sh328.1 billion in December 2023.
PSSS, which commenced operations in January of 2021, is a defined contribution scheme under which civil servants pay towards their retirement benefits which are topped up by Exchequer contributions.
Civil servants contribute 7.5 percent of their gross salaries from five and two percent previously while the government matches the contribution at 15 percent of civil servants’ gross salaries—a shift from the past when the government operated a non-contributory pension scheme financed fully by the Exchequer.
PSSS chief executive Jonah Aiyabei said the fund collects at least Sh3.7 billion monthly in members’ contributions and the government through their respective employers, translating to about Sh45 billion a year.
“We receive the funds, invest them, and get a return that we then use to pay our members as benefits when they retire,” he said.
The PSSS is managed by asset management firm GenAfrica while CPF is the scheme’s administrator and covers civil servants, including teachers employed by the Teachers Service Commission (TSC) and disciplined forces.
Previously, the government operated a non-contributory pension scheme financed fully by the Exchequer.
The model, however, proved unsustainable as the full burden of the pension bill was placed on taxpayers.
The creation of the PSSS was part of reforms in the public service pensions sector, which gave rise to the 2012 Public Service Superannuation Scheme Act.
All public defined benefit schemes were converted to defined contributory schemes aligning the schemes to best industry practices. Civil servants below the age of 45 along with new hires in the sector were obligated to make contributions to the fund while workers aged above 45 were given the option to join the contributory scheme.
The PSSS currently has 443,639 members compared to the 420,000 members recorded on December 31, 2023.
The PSSS fund scheme membership is largely drawn from the public service—Teachers Service Commission, disciplined service—the police and prison, civil service, and National Youth Service as prescribed by the Public Service Superannuation Scheme Act.
The TSC presently has 262,043 members enrolled in the PSSS marking it the single largest membership of the scheme, followed by the police and prison services at 116,010 and civil servants at Sh65,586.
As of December 31, 2023, TSC had 244,271 members, the police and prison services 115,573, and civil servants at 61,280 members. Other than the PSSS members who are fully enlisted, it has 1,206 members pending admission due to missing bio data. Of these, 711 are linked to the TSC, civil servants (492), and the disciplined services (3).
A rise in unremitted collections to the PSSS has emerged as a concern amid liquidity challenges by the national government.
For instance, the government failed to remit Sh219.9 million in its share of contributions to the fund in the financial year ending June 2023.
