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Pension fund investments in NSE stocks up 42pc to Sh206bn
About 9.35 percent of total pension assets were in quoted equities by the end of 2024, making stock market performance crucial for the pensions industry.
Pension funds raised their investments in stocks listed on the Nairobi Securities Exchange (NSE) by 42 percent to Sh206.4billion in 2024, new data shows, buoyed by a market recovery that saw the bourse post gains of 34 percent over the 12 months.
The 2024 investment performance by the pension funds in NSE-listed securities, marks a major turnaround compared to the previous year when their cash on the bourse fell to an 11-year low of Sh145.15billion—spooked by a market downturn that hurt activity and share prices.
“A key highlight of the period is the rebound in quoted equities, which had been on a steady decline over the past two years,” the Retirement Benefits Authority (RBA) said in an industry brief.
“This growth is attributed to the recovery of the stock market,” the regulator added.
About 9.35 percent of total pension assets were invested in quoted equities as of the end of 2024, making the performance of the stock market critical for the pensions industry.
The performance of the NSE measured by the Nairobi All Share Index soared 34 percent in 2024 to 123.48 points, from 92.11 points at the close of 2023 while investor wealth went up by Sh500 billion in the 12 months.
Investments in quoted securities by pension funds rose by 42 percent on a year-over-year basis, trending closely to the 46 percent jump in government securities as traditional asset classes continued to dominate the placement of the schemes.
Government securities remain the lead asset class, taking up a share of 54.3 percent of the pension funds assets or Sh.1.1 trillion.
The share of quoted securities ranked in third place behind guaranteed funds which tallied to Sh437.5 billion or 19.83 percent of the schemes’ portfolio.
Unquoted equities on the other hand rose faster by 266 percent, touching Sh13.3 billion in December 2024 from Sh3.63 billion previously.
Other investment classes that grew in the year included guaranteed funds, private equity, and commercial papers/non-listed bonds by private companies.
Immovable property, fixed deposits and listed corporate bonds meanwhile marked a decline in the period as pension funds sought relatively higher returns from other asset classes.
“Fixed deposits contracted as pension schemes opted to invest directly in government securities, which offered more attractive returns,” the RBA said.
Overall pension assets under management closed 2024 at Sh2.2 trillion increasing from Sh1.7 trillion in December 2023.
The growth was attributed to increased contributions from members during the year--largely due to enhanced contributions to the National Social Security Fund (NSSF).
Investment income also soared as funds earned greater returns from higher interest rates.
“The increased contributions from members during the period is mainly attributable to the enhanced NSSF contributions that moved to year three of implementations, where the lower limit was increased from Sh7,000 to Sh8,000 and the upper limit from Sh36,000 to Sh72,000,” RBA added.
About 92 percent of pension assets at the end of 2024 were concentrated in four asset classes, including government securities, guaranteed funds, quoted equities and immovable property.
