Retirees’ savings up 15.5pc to Sh633bn in six months
The NSSF retirement fund recorded marginal growth of Sh500 million between December and June, when it had assets of Sh121.5 billion. FILE
What you need to know:
Data from the RBA shows the industry assets stood at Sh633.4 billion in June this year, up from Sh548.8 as at end of last year.
Workers’ retirement savings grew by Sh85 billion in the first six months of the year boosted by increased monthly contributions and a robust stock market.
Data from the Retirement Benefits Authority (RBA) shows the industry assets stood at Sh633.4 billion in June this year, up from Sh548.8 as at end of last year.
“The growth was attributed to good performance of the equity market, stable low inflation rates, and an increase in scheme compliance,” said RBA.
Private pension schemes controlled Sh511.5 billion shillings, with the mandatory National Social Security Fund (NSSF) holding Sh122 billion.
The NSSF retirement fund recorded marginal growth of Sh500 million between December and June, when it had assets of Sh121.5 billion. The industry regulator however did not provide a breakdown of the assets under fund managers.
As at December Pinebridge was at the verge of surpassing NSSF in managing the largest volume of pension funds.
The statutory retirement fund’s assets are likely to go up if the President signs into law the NSSF Bill passed by Parliament last week.
The Bill proposes a monthly contribution equivalent to 12 per cent of the average national wage, contributed equally by the worker and the employer, up from the current flat rate of Sh400.
Private retirement schemes receive contributions proportionate to employees’ salaries, which results in proportionate increase in their asset base.
A third of the assets, Sh211 billion, are held in government securities with Sh147 billion invested in Nairobi Securities Exchange and Sh121.3 billion in real estate.
Government securities are risk-free investments for the retirement schemes with a predictable rate of return while the equities market ordinarily offer a higher rate of return but are a more risky option.
The stock market has risen 24 per cent this year as measured by the NSE 20-Share Index, boosting the industry’s asset base and driving growth of the retirees’ funds.
Treasury rates have ranged at about 0 per cent during the year as per the 91 day T-bill rate.
“With overall inflation for the period June 2013 at 4.91 per cent members, received significant positive real rates of return with the average one-year time weighted return of schemes recorded at 24.5 per cent for the same period,” said RBA.
The portfolio of retirement funds invested in real estate, which has been experiencing a consistent rally over the past decade, reached Sh121.3 billion in June, which constituted 19.1 per cent of the total.
Pension fund managers are limited to investing a maximum of 30 per cent of their assets in immovable securities.
The industry’s overseas investments also went up by 75 per cent to Sh14.9 billion, up from Sh8.5 billion.
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