Kenya’s public pension sector has witnessed a major development following changes in the custodial arrangements of the Civil Servants’ Pension Fund (PSSF), a retirement scheme that manages savings for thousands of government employees. In the latest decision, Co-operative Bank of Kenya and NCBA Group have been retained as custodians, while Kenya Commercial Bank has been appointed as a new custodian to oversee pension assets valued at over Sh242 billion.
The move comes at a time when PSSF has recorded rapid growth in both membership and asset value, making it one of the largest pension schemes in the country. The fund was established under the Public Service Superannuation Scheme Act, 2012, transitioning civil servants from a non-contributory pension system to a defined contribution scheme where both employees and the government make monthly contributions.
According to reports by Nation Media Group, the value of PSSF assets has surged from about Sh142 billion to more than Sh242 billion within a short period. This growth has been attributed to increased remittances, improved compliance, and returns from investments in government securities, equities, and other approved instruments.
Custodian banks play a critical role in pension fund management. They are responsible for holding pension assets in trust, settling transactions, keeping records, and ensuring that investments comply with regulatory requirements set by the Retirement Benefits Authority (RBA). Retaining Co-operative Bank and NCBA signals confidence in their performance and experience in handling large institutional funds.
The entry of KCB into the custodial framework is widely viewed as a strategic decision aimed at strengthening governance, enhancing oversight, and spreading operational risk across more institutions. Business reports by Capital FM note that KCB’s strong balance sheet, wide branch network, and experience with large public sector accounts position it well to handle complex pension fund operations.
For civil servants, the changes are expected to enhance the security of their retirement savings. With assets exceeding Sh242 billion, PSSF requires robust systems and multiple layers of oversight to safeguard contributors’ funds and support long-term sustainability.
However, oversight bodies have previously raised concerns about delayed remittances by some government agencies. The Auditor-General, as reported by The Eastleigh Voice, has warned that late remittances could negatively affect investment returns and members’ benefits if not addressed promptly.
Overall, the addition of KCB alongside Co-operative Bank and NCBA reflects PSSF’s response to its growing size and complexity. Analysts say the expanded custodial team could improve efficiency, accountability, and confidence in the management of one of Kenya’s most important public pension funds.
