The Retirement Benefits Authority (RBA) has licensed CIC Asset Management, a subsidiary of CIC Insurance Group, to manage pension funds.
The subsidiary became operational in mid 2011 and plans to ride on partnerships with co-operatives and investment clubs across the country to grow its business.
“We want individuals and corporates to enjoy the benefits of pension funds run professionally,” said CIC Asset Management managing director Peter Mwaura.
He said the firm would use information and communication technology (ICT) to reduce the cost of doing business and pass on benefits to customers. The fund manager expects to grow its portfolio fast, taking business from its unit trust business which had Sh2.4 billion last year.
The parent company Wednesday traded at four shilling per share with 281,600 stocks traded.
With an expanding middle class, the level of contributions in pension funds is expected to grow in the country with co-operative and Chamas providing a platform for fund managers to market themselves to the masses.
“We have established a sales force that will go to the market and look for pension schemes that are not being run professionally so that we can turn them into funds that can generate more wealth for pensioners,” said Mr Mwaura.
RBA has also introduced the Mbao Pension Scheme which aims to grow the saving culture among people at the bottom of the pyramid.
CIC Asset Management joins other 17 fund managers licensed by RBA as at December 2011, in an industry which has assets worth Sh403 billion. Pinebridge is the largest player, followed by Genesis, and CFC Stanbic.
The CIC subsidiary joins the industry at a time when it’s picking itself up having experience a huge value depreciation in assets held in 2011 as stock prices and the value of government securities slumped.
Due to the volatility witnessed at the stock market, there are propositions to cut the level of exposure that pension funds can have in ordinary and preference shares — and that in government securities increased.
Research conducted by consultants hired by the World Bank proposes that the limit of funds investable in listed shares be set between 20 per cent and 40 per cent of a fund’s total investments compared to the current 70 per cent.
The proposals also seek to remove the limit on the amount a retirement fund can invest in government securities, currently capped at 30 per cent of total assets.