Kenya’s pension industry tp hit Sh1.5 trillion by October

Friday, September 17th, 2021 00:44 |

Pension reforms. Photo/Courtesy

Kenya’s retirement assets could soar to Sh1.5 trillion by end of October 2021 from Sh1.48 trillion the industry held as at June this year, the Retirement Benefits Authority (RBA) projects.

KBA’s head of Research Shem Ouma yesterday revealed that the industry’s expected growth could play a key role in the overall capital markets growth – whose market capitalisation grew by10.88 per cent to register Sh2.7 trillion in the year ended June 2021.

“As at end of June this year the industry had about Sh1.48 trillion in assets under management, and based on our internal projections, I see the industry hit Sh1.5 trillion by end of October,” said Dr Ouma in Nairobi hotel yesterday on the sidelines of the Association of Pension Trustees and Administrators of Kenya (APTAK) launch.

The projections come amid concerns expressed in April this year when indications had pointed to depressed growth of pension assets, due to pandemic shocks.

During that period, pension assets under management grew by 5.8 per cent last year to reach Sh1.4 trillion, on account of Covid-19 knocks.

The industry held Sh1.3 trillion in as- sets in 2019 which was however a slower compared to a 7.8 per cent expansion rate achieved previously from fund managers and approved issuers, who held the majority of assets at Sh1.29 trillion during the year, including Sh209.8 billion held by the National Social Security Fund (NSSF).

Calm has recently returned to financial markets, including the pension industry, presumably driven by optimism around an economic recovery – as lockdowns and movement restrictions ended across major parts of the country.

Annuity covers

While there have been improvements in the sector amid the pandemic, industry experts such as APTAK queried reason be- hind increasing reluctance by Kenyans to subscribe to annuity covers, considering positive economic projections and expectations in the sector.

“The only solution to this is the ongoing push to a universal social security cover- age or social protection to Kenyans which essentially should also cater for those out of employment,” commented APTAK’s president Hosea Kili during the association’s formal launch since its retitling to integrate trustees.

Efforts by the government to increase the mandatory pension contribution by workers in order to eliminate old age poverty continue to divide policy makers de- spite mounting pressure by sector players.

Statistics show that less than 10 per cent of Kenyan population retire financially in- dependent with one of the reasons being cited for the sorry state being that when saving for retirement, most people under- estimate how much they will have to pay for medical expenses during their retire- ment years.

“Countries such as Lesotho, Zanzibar, South Africa, Namibia, Botswana, Rwanda and Mauritius among others, have gone even further to establish Universal Social Protection Funds for their citizens and there is a rapid rising trend in the adop- tion and uptake of Social Protection,” said Edward Odundo, CEO – Nairobi Securities Exchange (NSE)

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