The ongoing review of the Public Service Superannuation Scheme Act Cap 198A, which established a contributory pension scheme for teachers employed by the Teachers Service Commission, civil servants, and disciplined services personnel, promises significant benefits for members.
Since independence, the government has operated a non-contributory pension scheme for civil servants, with payouts funded directly from the Consolidated Fund. However, in 2021, the government operationalised the Public Service Superannuation Fund (PSSF) as a contributory pension scheme for teachers, civil servants and disciplined services personnel.
Currently, the scheme has 443,639 members who contribute 7.5 percent of their basic salary every month, with the government contributing 15 per cent for each member.
During the implementation of the contributory pension scheme, some challenges and inconsistencies with other laws such as the RBA Act were observed. They include the vesting period for member contribution, portability of pension and scheme governance.
Retirement benefits
The Cabinet Secretary National Treasury and Economic Planning appointed a multi-agency committee in 2022 to review and recommend areas of amendment to the Act. The committee has reviewed and proposed amendments to the Act as per the terms of reference to streamline access to retirement benefits by members and align with retirement benefits practices.
One key change in the proposed amendments is the ability for members leaving public service to transfer their contributions to another registered pension scheme. This aligns with the Retirement Benefits Act on the portability of benefits, providing flexibility regardless of sector. Members will be able to transfer their accrued pension benefits out of the Scheme if they exit public service.
In line with the RBA Act, the PSSS Act will now allow members emigrating from Kenya before reaching retirement age to access their retirement benefits. The amendments provide that scheme members who permanently leave the country will be able to withdraw the balance in their retirement savings account. This is a significant improvement over the current law, where Section 26 does not address options for members who emigrate.
The amendment provides for immediate vesting of contributions. This means members become entitled to employer contributions immediately upon remittance to the scheme, offering greater security and flexibility in retirement savings.
Pension benefits
Upon retirement, members will also enjoy more flexibility in how they receive their pension benefits. The proposed amendments introduce the option for monthly or quarterly withdrawals from an Income Drawdown Plan. Previously, members were limited to purchasing a monthly or quarterly annuity from a life insurance company of their choice.
To address concerns on the rights of officers who had served in the Government before the enactment of the contributory scheme, section 50 of the Act will clarify the Government’s responsibility in the payment of the accrued benefits.
To further streamline member services and ensure efficient operations, the Scheme is also developing the Public Service Superannuation Scheme Regulations 2024. These regulations will operationalize the Act and provide specific guidelines for implementing the various provisions. By aligning the regulations with the RBA’s guidelines and industry best practices, we aim to create a robust and efficient system that benefits all members.
These reforms aim to modernise and enhance the pension system for public servants, offering improved clarity, flexibility, and governance, ultimately ensuring a more secure and well-managed retirement process for members.
Throughout this process, we are guided by Article 43 of the Kenyan Constitution, which guarantees every citizen the right to social security. By ensuring that members have access to adequate retirement benefits, we are fulfilling our obligation to provide social security in retirement.
The writer is the Chief Executive Officer of the Public Service Superannuation Fund
Source link : https://nation.africa/kenya/blogs-opinion/blogs/teachers-police-to-get-better-pension-system–4784142
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Publish date : 2024-10-02 21:00:00
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