Returns from equities and offshore investments went into the negative territory last year, a downturn in fortune after stellar performance the previous year.
This means pensioners barely managed to beat inflation in returns, with the cost of living having gone up by an average of 4.7 percent last year.
The stock market took a beating in the period, with the benchmark NSE 20 share index closing the year 23.7 percent down at 2833.84 points, as investor wealth shrunk by Sh419 billion to Sh2.1 trillion.
Offshore investment returns stood at -11.6 per cent last year, compared to 23.9 percent in 2017.
Pension fund returns in 2018 fell sharply to hit five per cent compared to 18.7 percent in 2017, weighed by faltering equities and offshore returns.
Industry data compiled by Actuarial Services East Africa (Actserv) shows returns from equities and offshore investments went into the negative territory last year, a downturn in fortune after stellar performance the previous year.
This means pensioners barely managed to beat inflation in returns, with the cost of living having gone up by an average of 4.7 percent last year.
“Schemes posted a weighted average return of -0.04, five and 9.8 percent for the quarter, year and three-year annualised return respectively,” said Actserv in the fourth quarter 2018 industry report.
During the year, equities recorded the sharpest reversal in fortunes, giving a return of -11 per cent last year compared to 2017 bumper returns of 28.7 percent.
The stock market took a beating in the period, with the benchmark NSE 20 share index closing the year 23.7 percent down at 2833.84 points, as investor wealth shrunk by Sh419 billion to Sh2.1 trillion.
Offshore investment returns stood at -11.6 per cent last year, compared to 23.9 percent in 2017.
“Offshore recorded drastic decline across all periods largely due to slowdown in global equity markets,” said Actserv.
Pensioners were, therefore, only able to eke out a positive overall return due to the continued good performance of the fixed income investment, which offered them a return of 13.8 percent last year and 14.5 percent in 2017.
The investment portfolio of many schemes is heavily weighted towards fixed income, hence the positive performance was enough to cover for the losses in the other two classes.
By the end of last year, schemes had on average put 63.1 percent of investments in fixed income, compared to 22.6 percent for equities and 1.7 percent in offshore assets. Property and cash accounted for 12.3 and 0.3 percent respectively.
Things are, however, looking up for equities this year, going by the performance of the market so far.
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