The Public Service Superannuation Scheme Act, 2012, was assented to on 9th May 2012. The Act established the contributory Public Service Superannuation Scheme (PSSS) to provide retirement benefits to public servants. The law requires that the Cabinet Secretary appoints and gazettes the commencement date of the scheme. Despite numerous challenges that has occasioned the delay, the Cabinet Secreatry gazetted the 1st January, 2021 as the commencement date of the Act.
A Board of Trustees has been constituted in line with provisions of the Act. All actors in the Public Service are requested to render support to the Board and the staff for a smooth implementation of the scheme.
The scheme rolling out covers all employees of the Public Service who are recruited through:
- the Public Service Commission;
- the Teachers Service Commission;
- the National Police Service Commission; or
- any other service that the Cabinet Secretary determines to be public service for the purposes of the Act.
Upon commencement of the contributory scheme, the current Public Service Pension arrangement will be closed to all new employees and all serving employees who will be aged below 45 years as at 1st January, 2021. Employees aged 45 years and above as at that date will be given an option to join the new Scheme or remain in the old Scheme. It’s important to note that there will be over 333,460 public servants who will be below the age of 45 Years as at 1st January 2021.
The Institutional Framework of the Scheme comprises of the Public Service Superannuation Fund and the Board of Trustees. The Board which draws membership from both the employer and the workers’ unions, is charged with the responsibility of operating and managing the fund. All contributions shall be paid into the Fund and conversely, all the benefits and any other payments required under the provisions of the Act shall be paid out of the Fund. The operations of the Scheme shall be in accordance with the Retirement Benefits Act.
This scheme is portable and allows employees to transfer their services to other employers without losing their pension benefits. Employees who for any reason exit Government service before the retirement date, will be allowed to access their own accumulated contributions and a further 50% of the Government portion on leaving service.
Under the new scheme, monthly contributions by employees of up to 30% of their basic salary or Kshs. 20,000 whichever is lower will be tax deductible. This means that the contribution is deducted from the salary before tax is calculated. This in effect reduces the tax level and improves the pay of an employee as well as avoiding double taxation of pension contributions and pension payouts. The new scheme ensures involvement of the employees and members in the management of their retirement fund through participation in the Board of Trustees in accordance with the Retirement Benefits Authority. This in essence enhances a sense of ownership and oversight of the management of the fund.