NSE recovery ups pension assets under management to Sh2.3tr

The recovery of the stock market last year was a shot in the arm for the pension sector. [Courtesy] The recovery of the stock market last year was a shot in the arm for the pension sector. The season saw fund managers find confidence to invest in quoted equities, causing assets under management to surpass the Sh2 trillion mark. As the shilling strengthened, the Nairobi Stock Exchange (NSE) witnessed more investors, including foreign ones. They flocked back to the bourse, seizing the opportunity as the window for high returns from government paper was closing. "Investments in government securities saw a significant 46 per cent increase, driven by rising interest rates," reads the latest industry report of the pension sector. Quoted equities also recorded substantial growth of 42 per cent, supported by a market rebound, particularly in the last quarter of 2024." The report by the sector regulator, Retirement Benefits Authority (RBA) shows quoted equities as one of the asset classes, which has always been shunned by fund managers, seeing a revival in the year, growing by 15.6 per cent in the last six months of the year. The RBA report published April 7, 2025, documents significant growth also being witnessed in private equity (85.1 per cent), offshore investment (65.3 per cent), government securities (17.0 per cent), and guaranteed funds (8.0 per cent). "A key highlight of the period is the rebound in quoted equities, which had been on a steady decline over the past two years. This growth is attributed to the recovery of the stock market and a stable exchange rate, attracting more foreign investment," the report says. RBA shares the performance of the NSE during the period when the NSE 20 Share Index, the stock market's tracker for the 20 best-performing listed companies, increased by 21 per cent from 1,656.50 points in the second quarter of the year to 2010.65 points in the fourth quarter. The NSE All Share Index also increased by 13 per cent to 123.48 points in the fourth quarter of the year. "The volume of shares traded increased significantly by 59 per cent from 1090.22 million shares in the second quarter to 1729.31 million shares in the fourth quarter," the report says. It adds that the equity turnover increased by 45 per cent - from Sh28.39 billion in the second quarter of the year in review to Sh41.12 billion in the fourth quarter. "With 9.35 per cent of total pension assets invested in quoted equities, the performance of the stock market is critical for the pensions industry," the report says. Pension assets under management stood at Sh2.3 trillion as of December 2024, having grown from Sh1.7 trillion in December 2023. A majority of this growth, as well, was due to the enhanced contributions to the National Social Security Fund (NSSF) courtesy of the NSSF 2013 Act. "The growth in assets witnessed during the period emanated mainly from investment income and contributions, particularly NSSF contributions that moved to year two of implementation, where the lower limit increased from Sh6,000 to Sh7,000 and the upper limit from Sh18,000 to Sh36,000," the report says. The report, however, notes that despite the relative diversification witnessed in portfolios as a result of the favourable exchange rate, a majority of investments were concentrated in the four asset classes: government paper, quoted equities, guaranteed funds, and immovable property. "Likewise, the investment income made during the period was a result of a stable macroeconomic environment. Most of the key macroeconomic variables remained stable during the reporting period," the report says.

NSE recovery ups pension assets under management to Sh2.3tr

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NSE recovery ups pension assets under management to Sh2.3tr

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