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Polls hit pension schemes hard in the third quarter

National Social Security Fund staff attends to clients during a sensitisation drive in Kisumu in March. photo | ondari ongega | nmg
National Social Security Fund staff attends to clients during a sensitisation drive in Kisumu in March. photo | ondari ongega | nmg 

Equities returns for pension schemes fell sharply in the third quarter on the back of negative effects of the political standoff around the presidential poll.

An industry survey by Actuarial Services EA (Actserv) for the period shows the returns fell to seven per cent compared to 18 per cent in quarter two, as returns for fixed income and offshore investments also came down.

The stock market was on a rally in the second quarter of the year, but was pulled back after dispute over the Presidential poll prolonged the election amid unrest in parts of the country.

The election is yet to be concluded, with the October 26 repeat poll now the subject of a fresh petition at the Supreme Court.

“Equities recorded an average three-month return at seven per cent, a significant decline compared to the previous quarter’s return of 18 per cent. This was attributed to the annulment of the result during the quarter.

However, despite the annulment the equity performance still remained positive,” said the Actserv survey.

The funds were, however, able to beat the NSE’s main indices during the third quarter.

The NSE 20 Share Index was up four per cent while the All Share Index rose 6.1 per cent in the three month period, compared to gains of 15.9 per cent and 17.2 per cent respectively in quarter two.

The average return for pension funds in the quarter was four per cent, compared to 7.6 per cent in the second quarter of the year.

On an annualised basis, the average return stood at 14.4 per cent at the end of September, owing to high equity and offshore returns in the second quarter of the year.

A similar survey done by pension fund administrator Zamara (formerly Alexander Forbes EA) shows that the average annualised return in the one year to September stood at 15.4 per cent.

Despite the lower than expected returns in quarter three, the funds are still on course to beat inflation this year offering relief to pensioner subscribers.

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