Pension sector grows as assets hit Sh750b

Kenya Railways Staff Retirement Benefit Scheme members erect a warning sign on a piece of land near Rahimtullah building at Upperhill that they allege had been grabbed by a private developer. The sector registered impressive results. [PHOTO: MBUGUA KIBERA/STANDARD]

Pension industry assets increased to Sh750.02 billion in the first half of last year compared to Sh696.68 registered in December, 2013.

This represents a 7.7 per cent increase. From June 2013 to June 2014, the assets recorded an 18.4 per cent increase from the Sh633.56 billion to Sh750.02 billion.

Retirement Benefits Authority (RBA) said yesterday the industry assets under their management grew by 18.4 per cent from Sh633.56 billion in 2013 June to Sh750.04 billion in June 2014.

RBA Chief Executive Officer Edward Odundo in a report titled, Retirement Benefits Industry Performance Report for December 2013 – June 2014, explained that the amount registered was composed of the Sh628.18 billion held by the fund managers and insurance issuers and Sh76.8 billion internally administered by National Social Security Fund (NSSF).

This includes an additional Sh45.02 billion of property investments directly managed by scheme trustees as of June 30, 2014. “The growth of the industry can be attributed to the good performance of the quoted securities, revaluation of property assets and a stable performance of the bond market,” said Odundo.

Dr Odundo said during the review period, there has been a marked improvement in scheme breaches on a scheme to scheme basis. “As compared to December 2013 the percentage of schemes in breach reduced by one per cent to 22 per cent of the total 450 registered segregated schemes that submitted their investment returns,” said Dr Odundo.

“Across the 11 fund managers, there were 114 breaches as compared to 121 and 133 breaches registered in December 2013 and June 2013 respectively.”

Registered schemes

The number of schemes in breach has also reduced from 121 schemes registered in June 2013 to 101 scheme registered in June 2014.

He confirmed that, Amana Capital, Stanlib Investments, Dry Associates Asset Managers and Zimele Kenya exhibited the highest non-compliance to the investment guidelines.

The fund managers had more than 30 per cent of the schemes under their management with breaches for the period ending June 2014. Dr Odundo said fund managers are supposed to adhere to the investment guidelines in all segments they invest in, for example, government securities, property market, guaranteed funds, fixed income, offshore, and quoted equities.

“Asset portfolio diversification remained similar to previous periods with only a marked growth in the government securities from 37 percent in December 2013 to 38 per cent in June 2014. Majority of the managers invested in long-term government bonds,” he added.

Odundo said during the same period, the industry witnessed a reduction in investments in offshore investments by one per cent, from the three per cent reported in December 2013. Most schemes invested in longer term government securities with most fund managers investing in bonds with maturity rates of more than 10 years and between eight to 10 years.