Inside Politics

Pension scheme trustees urged to diversify investments to revitalise sector

Tuesday, October 26th, 2021 00:00 |
Pension fund. Photo/Courtesy

Attempts to ensure more Kenyans have a safety net when they retire was hit hard by Covid-19 pandemic but stakeholders in the pension market warn the sector must diversify investments to survive pandemic blues.

Industry professionals including 100 pension fund Trustees said they foresee a near-full recovery by year end or first quarter of 2022.

But caution that this will depend on a host of interventions by stakeholders.

Capital Markets Authority Chief Executive Wykcliffe Shamiah said pension fund managers must diversify their investments if they stand a chance to survive in a space that is ordinarily “bullied” by elections.

The country goes to the polls in August next year, and naturally investors tend not to risk their investments during that period.

“We support diversification of investments, and our role as a regulator is to bring back investor confidence,” Shamiah said.

Assets under management

Pension funds in Kenya had assets under management at Sh1. 3 trillion as at December 2019, representing 13.4 per cent of the  gross domestic product.

That figure is estimated to have hit Sh1.4 trillion worth of savings invested in various asset classes by 2020 before the pandemic hit.

The Central Bank of Kenya (CBK) data for 2019 showed for instance, that pension funds accounted at the time for 28.91 percent of government domestic debt, which stood at Sh3.40 trillion in August two years ago.

Kenya also holds pension assets per capita at Sh27, 331 compared to Namibia that topped the category with $4,582 (Sh463, 698) at the end of 2019.  

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