Civil servants' pension fund eyes brand clarity, new products in diversification strategy

PSSF plans to introduce mortgage and post-retirement medical savings products as part of its diversification strategy.[File, Standard]

The Public Service Superannuation Fund (PSSF) plans to introduce mortgage and post-retirement medical savings products as part of its diversification strategy.

The fund also wants to rope in contract workers within the Public Service to grow its asset base, which now stands at Sh340.4 billion.

These changes will also see the fund adopt PSSF as its brand recognition to avoid confusion with the Act that formed it the Public Service Superannuation Scheme (PSSS).

A Bill is already before the National Assembly to effect the changes. The Bill is scheduled for a second reading.

The Public Service Superannuation Scheme  (Amendment) Bill, 2025 seeks to align provisions in the PSSS Act, 2012, to the Retirement Benefits Act and its subsequent regulations.

Corporation Secretary Angela Kiptoo says the amendments seek to have the fund catch up with the current trends in the pension sector. While the PSSS Act was enacted in 2012, the fund was operationalised almost a decade later in 2021.

“So by the time the scheme came into operation, of course the retirement benefits industry had evolved quite a lot,” she says. ”There were reforms that we needed to keep up with, and that informed our decision to amend our Act, to keep up with the changes that are happening in the industry.”

Kiptoo, speaking during an update on the fund's performance, noted that while PSSF is anchored by an Act of Parliament, it still operates within the confines of the Retirement Benefits Act, as overseen by the Retirement Benefits Authority (RBA).

Some of the changes in the Bill are meant to align the fund with the Retirement Benefits Act. “We do not exist in isolation, and we cannot just conduct our business the way we want. We have someone who ensures we do it according to the law. Even as PSSF was enacted by law, it had to be registered as a retirement benefits scheme by the RBA,” she explained.

The Bill repeals Section 26 of the PSSS Act, 2012, allowing members to access their savings for purchases such as homes.

“The principal Act is amended by repealing section 26 and replacing it with the following new section (26): A member may access accrued retirement savings on leaving employment before retirement in accordance with the Retirement Benefits Act,” reads the Bill in part.

RBA allows members to utilise a portion of their savings as collateral towards the purchase of a home. Currently, Section 26 of the PSSS Act, 2012 bars members from withdrawing the balance in their retirement savings account  before they retire under Section 27.

However, it provides that the member may withdraw a) his contribution and accrued interest in full, on leaving employment for any other reason; and (b) the aggregate of any additional voluntary contributions made into the Scheme.

Clause 36 of the Bill proposes to amend Section 55 of the PSSS Act, 2012 to allow the fund to create a medical savings platform.

“Section 55 of the principal Act is amended by inserting the following new paragraph immediately after paragraph (b)- (c): the establishment of a post-retirement medical fund within the Scheme,” reads the Bill in part.

Clause 23 of the Bill proposes a new section that allows a member who exits the fund to transfer their benefits to another registered scheme as regulated by the RBA.

The changes, in addition to brand identity, will then position PSSF as the fit-for-purpose scheme in today’s economy.

Kiptoo said the fund seeks to evolve with members’ needs. “We do not just want to be seen or known as an institution that receives pension contributions, invests and pays upon retirement. What other added value can we add to our members?” she posed. “In that case, we seek to introduce other products through our bill. These products include mortgages.”

She said RBA already provides for that, and this is just the fund keeping up. “We also want our members to contribute to their medical needs when they are still working, because post-retirement, there will be medical needs. But then, they ought to have made some savings when they are still in active service,” she said.

Clarity on the fund’s name, which Kiptoo noted sometimes brings confusion, has been addressed in the Bill.  “There shall be a Public Service Superannuation Scheme Fund, which shall vest in and be operated and managed by the Board.”

Kiptoo said there are times when the fund is referred to as PSSS and other times PSSF.  “That confusion arises from our Act as currently drawn. In the Bill, we have sought to bring clarity, and we are adopting one name, which is PSSF. If the Bill goes through, we will be known as PSSF,” she said.

The fund is also targeting contract workers through the Bill. Kiptoo said what PSSF does currently is to cater for permanent and pensionable employees, yet there are contract workers within government institutions.

“There is a National Treasury circular that was issued in 2024 that allows pension schemes to manage these contributions. The Retirement Benefits Act also provides for that. We want to be progressive to allow us to manage gratuity for employees on contract terms,” she said.