Retirement schemes assets hit Ksh.952B last year


Retirement schemes assets hit Ksh.952B last year

In Summary

  • The marginal growth in assets was achieved on the backdrop of disruptions resulting from the COVID-19 pandemic.
  • The average return by the schemes fell by more than half to 7.3 from 17.1 per cent in 2019 from reduced economic activity.
  • Conservative schemes who largely invest in fixed income instruments saw the highest average returns at nine per cent ahead of moderate schemes at 6.7 per cent as fixed income assets proved to be more resilient in the pandemic era.

Local retirement schemes assets grew by 7.5 per cent to hit Ksh.951.8 billion in 2020 from a lower base of Ksh.885 billion in 2019.

This is according a full year retirement schemes survey by Zamara Consulting Actuaries which covered 421 schemes under 11 fund managers.

The marginal growth in assets was achieved on the backdrop of disruptions resulting from the COVID-19 pandemic.

The impact of the global health crisis for instance saw the returns made by schemes plummet reflecting the prevailing economic operating environment.

The average return by the schemes for instance fell by more than half to 7.3 from 17.1 per cent in 2019 from reduced economic activity.

Conservative schemes who largely invest in fixed income instruments saw the highest average returns at nine per cent ahead of moderate schemes at 6.7 per cent as fixed income assets proved to be more resilient in the pandemic era.

Meanwhile, schemes with a greater appetite for risk saw returns plummet to 5.3 per cent as the local equities market registered negative returns in the year with the Nairobi All Share Index (NASI) shedding 8.6 per cent of its value in the year.

Nevertheless, fixed income assets were hit by increased liquidity and the Central Bank of Kenya (CBK) move to reject expensive bids with interest on the 91-day Treasury bill for instance falling to 6.9 from 7.2 per cent.

The offshore equities market however registered solid returns with the S&P 500 index marking gains of 16.3 per cent.

According to data from the survey, local retirement schemes have continued to take conservative risks with 72.8 per cent of assets being channeled to fixed income.

Equity investments are the second preferred class at 20.8 per cent ahead of properties at 5.4 per cent and offshore stakes at 0.9 per cent.

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Story By Kepha Muiruri
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