The National Social Security Fund (NSSF) has booked Sh3.15 billion in fair value losses for the financial year ended June 2022 from a sharp fall in the value of its stock holdings.
The paper losses for the State-backed pension fund have been largely attributed to a dip in valuation of shares held at the Nairobi Securities Exchange (NSE) in the prior 12 months from July 2021.
“Return on investment decreased from Sh32.7 billion in 2021 to minus Sh3.15 billion in 2022. The decrease was mainly caused by a decline in fair value loss in net investment income from the valuation of quoted stocks at the NSE,” the NSSF noted in abridged financial statements for the 2021/22 fiscal year.
While the fund marked growth in investment income from Sh21.6 billion to Sh26.8 billion, the NSSF saw a negative change in the market value of investments to a loss position of Sh29.2 billion from Sh11.5 billion previously.
Despite the slump occasioned by the deteriorated performance of the NSE, the NSSF increased its holdings of quoted stocks to Sh446.5 million from Sh445.2 million.
The fund, nevertheless, has a larger holding of unquoted stocks, which stood at Sh57.8 billion at the end of the period, albeit falling slightly from Sh66.7 billion previously.
At the same time, the NSSF grew its holdings in government securities to include Sh1.6 billion in Treasury bills and Sh161.2 billion in Treasury bonds.
Equally, the fund’s stock of corporate bonds rose to Sh1.75 billion from Sh1.09 billion a year prior.
NSSF's total assets improved in the fiscal year to Sh289.3 billion from Sh285.9 billion in June 2021 at a time when the fund also marked an increase in the value of its investment properties to Sh35.4 billion from Sh34.7 billion.
During the year, member contributions to the fund rose by 10 percent to Sh15.92 billion from Sh14.47 billion.
The NSSF is set for a windfall in member contributions in the just-ended financial year (to June 2023) following the implementation of the 2013 NSSF Act, which raised member contributions from a flat rate of Sh200 per member, matched by the employer.
The slump in the NSSF net investment income is likely to result in a significant slash to interest paid out on savings by members.
The board of the fund has noted it is in the process of finalising the interest payout to members with the pronouncement awaiting an actuarial audit.
“In the year ended June 30, 2022, the Board of Trustees is in the process of finalising the interest payable on members’ funds based on actuarial valuation of the fund by Zamara Actuaries,” the NSSF added.
For the year ended June 30, 2021, the fund paid an interest of 10 percent on members’ contributions to mark the highest payout in seven years.
This was as the fund marked a more than two-fold rise in net investment income.
