The Public Service Superannuation Fund increased its Eurobond investments by 69 per cent to Sh4.4 billion in the year ended June 2025.
The Public Service Superannuation Fund (PSSF), the pension scheme for new civil service employees, increased its Eurobond investments by 69 per cent to Sh4.4 billion in the year ended June 2025.
The move reinforces the fund’s strategy to diversify its portfolio beyond domestic government securities.
This marks a significant rise from the Sh2.6 billion the fund had invested in Kenyan Eurobonds in the previous financial year, when it first entered offshore sovereign debt markets.
The expansion reflects a strategic shift from the cautious approach adopted during the Covid-19 pandemic, when the fund focused almost entirely on Treasury bills and bonds to safeguard capital and secure guaranteed returns.
At the time, the board said the conservative stance was necessitated by heightened global and domestic market uncertainty, prioritising capital protection over higher-yielding but riskier assets.
“The fund has adopted a result-oriented and risk-based approach to balance between appetite for good returns and risk exposure,” PSSF said in a past report. “Owing to the impact of the Covid-19 pandemic on investment returns, the board decided to invest in government securities to ensure guaranteed returns on the investments.”
Equity allocations
Alongside Eurobonds, PSSF has also expanded its asset base through listed equities. The fund purchased shares in leading companies on the Nairobi Securities Exchange (NSE), including major banking and consumer stocks. These equity allocations form part of a broader plan to enhance long-term returns, reducing reliance on government securities that have traditionally dominated the portfolio.
As of June 2025, Treasury bonds accounted for 80.3 per cent of PSSF’s investments, with equities and Treasury bills representing 7.1 per cent and 4.2 per cent, respectively. Cash-based instruments such as call and fixed deposits remain part of the mix, offering liquidity alongside modest returns.
Industry regulations permit pension schemes like PSSF to invest across a wide spectrum of asset classes, including corporate bonds, property, private equity, and real estate investment trusts, though fixed-income instruments typically form the bulk of portfolios.
PSSF’s growing assets have been underpinned by contributions from its expanding membership, which now includes hundreds of thousands of civil servants since the scheme’s inception in 2021. The fund paid its first member benefits in the year ended June 2024, marking the shift from pure accumulation to payout as retirees began exiting service through retirement or death.
However, the latest audit report reveals that the government had not remitted Sh1.2 billion in employee contributions by the end of August 2025. Delayed remittances reduce the time available for these funds to earn returns, potentially affecting retirement benefits for workers within Kenya’s already strained pension system.
The PSSF experience underscores the ongoing balancing act for pension funds: diversifying for higher returns while safeguarding contributions to ensure financial security for civil servants.
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