Co-operative Bank of Kenya has registered a major milestone after being picked among financial institutions that will handle the lucrative public pensions contributions. The Public Service Superannuation Scheme (PSSS) revealed three banks had been selected as registered custodians of the pension funds.
Co-operative Bank, NCBA and Stanbic banks won the contract to keep the more than Ksh100 billion in pension contributions held by the Public Service Superannuation Scheme. The three banks will manage billions collected from more than 350,000 civil servants, including police officers and teachers who started contributing to their own pension savings scheme in 2021.
>> Manager Who Has Worked for Major Banks Takes Charge at KeBS
“For now, we have a clear roadmap and have already done contracts with a fund manager, three custodians, and a fund administrator. This has been done through a competitive process with the contracts being awarded through the scheme trustees,” PSSS chief executive, Mr Jonah Aiyabei, said.
PSSS was created as part of reforms in the public service pensions sector that gave rise to the 2012 Public Service Superannuation Scheme Act. PSSS is a defined contribution scheme under which civil servants save for their retirement benefits and the Exchequer tops up.
From January 2024, civil servants are expected to contribute 7.5% of their gross salaries from 5% and 2% previously while the government matches the contribution at 15% of civil servants’ gross salaries.
The scheme 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 other banks that had expressed interest in this deal but were unsuccessful include Bank of Africa, Equity, I&M, KCB, the National Bank of Kenya, Prime Bank, SBM, and Standard Chartered who are registered custodians of pension banks.
The winning custodian banks will serve PSSS for three years renewable on expiry by mutual agreement for a further period of three years depending on performance.
The banks are expected to keep all the schemes’ assets and produce quarterly financial management reports on the fund. The custodians will also carry out statistical analysis of the investments and returns on investments from pension funds in their custody and provide the data to the fund administrator.
Three years since the start of the contributions, PSSS assets under management have touched Ksh105 billion from more than 422,000 members. Asset management firm GenAfrica runs the scheme while CPF is its administrator.
“We are now second after the NSSF (National Social Security Fund) with around Sh105 billion in assets value driven by both member and employer contributions. Combined, we are getting around Sh3.6 billion in contributions every month,” said Dr Aiyabei. (additional reporting by Business Daily)
Leave a comment