PSSS became operational on January 1, 2021, is a defined contribution pension fund regulated by the Retirement Benefits Authority (RBA). It relies on members’ contributions as matched with those from the government, the employer, for investments
More than three years since it became operational, the Public Service Superannuation Scheme (PSSS) fund value has already hit Sh101 billion making it the second biggest pension scheme in the country after the National Social Security Fund (NSSF).
PSSS, which became operational on January 1, 2021, is a defined contribution pension fund regulated by the Retirement Benefits Authority (RBA) and relies on members’ contributions as matched with those from the government, for investments.
As at December 31, 2023, the scheme had over 420,000 members largely drawn from the public service- Teachers Service Commission (TSC), disciplined service- the police and prison, civil service and National Youth Service (NYS) as prescribed by the Public Service Superannuation Scheme (PSSS) Act.
At 244,271, TSC has the biggest membership to the scheme followed by the police and prison services at 115,573 and civil servants at 61,280.
Other than the PSSS members who are fully enlisted, it has 1,206 members pending admission due to missing bio data spread as 711 for TSC, 492 for civil servants and 3 for the disciplined services.
In an interview, Dr Jonah Aiyabei, the PSSS fund CEO said that the fund collects at least Sh3.7 billion monthly in members’ contribution 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 to our members as benefits when they retire,” says Dr Aiyabei adding; “safeguarding the scheme through transparency and accountability is our clarion call.”
Dr Aiyabei is an experienced executive with a track record in the pensions industry in the country. He most recently served as the director of Morendat Institute of Oil and Gas, where he led the institution in building capacity for the oil and gas industry.
The PSSS fund is administered by the nine-member PSSS board of trustees that draws representation from TSC, NPS and PSC.
The PSSS board of trustees is chaired by former PS Titus Ndambuki with Ms Agnes Mwendwa as vice chairperson.
The members include Mr Michael Kagika, Ms Joan Machayo, Ms Mary Adhiambo, Mr Wicks Njenga, Mr John Matiang’i, Ms Rosemary Kuraru and Ms Pamela Ochieng.
Other than being the fund CEO, Dr Aiyabei is also the secretary to the PSSS board.
Of the Sh3.7 billion realized in the month of December 2023, Sh1.23 billion came from the members’ contribution with Sh2.45 billion from the government to match the employees’ contributions.
At Sh756.96 million, TSC had the lion’s share of the members’ contributions with government marching it with Sh1.51 billion, followed by police and prisons at Sh279.04 million with Sh557.99 million from the government and civil servants Sh193.98 million plus Sh386.49 million from the government.
The Public Service Superannuation (PSSS) Act of 2012, which establishes the scheme, states that a member shall contribute 7.5 percent of their pensionable salary every month to the scheme.
The government then matches each of the members’ contribution with 15 percent, a direct charge on the consolidated fund, aggregating the contribution to the fund to 22.5 percent of the basic pay.
Other than the PSSS Act, the public service superannuation guidelines handbook published by the National Treasury and the Human Resources Policies and Procedure Manual for Public Service of May 2016, provide for these benefits.
The CEO notes that being a funded defined contribution scheme compared to the scheme that existed before, it means that it is financed by the members monthly contributions with government coming in to match what the members contribute.
Other than TSC, civil service and disciplined services, the law also allows other institutions to join the scheme.
When the law came into force, it made it mandatory for employees who are 45 years and below to join the scheme with those above 45 at liberty to join but without matching contribution from the government.
The pension scheme that existed before the PSSS Act came into force, was a defined benefit scheme where the government was the sole contributor making it quite expensive for the taxpayer.
“When the time for retire came, the members were paid pay as you go based on the budget set aside as opposed to the current arrangement where benefits are paid based on investments accrued from the members contributions,” says the fund CEO.
The investments undertaken by the scheme are largely in equity markets, securitized bonds and property based on the country’s investment policy and the general RBA guidelines.
Dr Aiyabei notes that the scheme processes and pays claims within 30 days of lodging them.
To access the benefits one must be a retired public officer “because you cannot be paid the benefits while still in service.”
The police have a unique retirement period because they have to serve for at least 12 years before they can opt for retirement from service, something Dr Aiyabei says PSSS has to consider.
“No claim has exceeded 30 days. As soon as we get the claims from employers we process and pay them,” the CEOP says.
The available data shows that PSSS received 714 claims for processing out of which 505 have already been processed and paid, six cases under batch 60 are awaiting management approval and 8 cases under batch 61 are in the process of submission for approval.
About 195 cases are pending processing with a majority of them occasioned by gaps in contributions- under remittances and non-remittance