RBA targets Kes2.4trn in its 5-year blueprint

Kenya’s Retirement Benefits Authority (RBA) is embarking on a ruthless target to more than double the country’s pension savings to Sh2.4 trillion in the next five years.

Chief executive Nzomo Mutuku on Tuesday said the sector regulator is betting on largely ignored informal sector to grow pension coverage from the current 20 percent to at least 30 percent by 2024.

He spoke during the launch of RBA 2019-2024 strategic plan premised on improving access, efficiency and stability of pension contributions in the country, adding that the authority is also betting bit on its mobile application to spur the sector in a bold move that will see pension schemes required to roll out products similar to that of National Social Security Fund that allows M-Pesa contributions of at least Sh200.

The Plan, as was the case with the previous plans, has been guided by the     country’s economic development blue print Vision 2030, which aims to transform Kenya into a newly industrialized, “middle-income country providing a high quality of life to all its citizens by the year 2030,” he said.

The financial sector is positioned to play a crucial role in the realization of this goal.

The retirement benefits assets under management grew by 8 percent from Ksh. 1,080.1 billion in December 2017 to Kshs1, 166.6 billion in June 2018.  Comparing with the same period last year (June 2017) the assets grew by 21.15 percent up from Ksh. 963.04 billion. The growth of the assets can be attributed to improved compliance, gradual recovery in the stock market after the aftermath of the prolong electioneering period in 2017.

The fund managers and approved issuers held majority of the assets amounting to Ksh. 998.17 billion. A total of Ksh. 66.08 billion of investments was internally administered by the National Social Security Fund (NSSF) while Ksh. 102.4 billion of property investments was directly managed by the trustees of the various schemes.

The assets under fund management include Kshs.155.27 billion of NSSF funds which are managed by 5 external managers. Assets managed internally by NSSF3 are majorly in immovable property, quoted equities, cash and demand deposits, fixed deposits, as well as unquoted securities.

The schemes continued to invest heavily in government securities with the asset class recording 36.32 percent of the total assets under management.

Most of the investments in the various asset categories showed some growth except the listed corporate bonds, fixed deposits, unlisted/unquoted equities and REITs, which slightly dropped in absolute terms. In terms of the percentage distribution per asset class category, government securities still accounted for the biggest share of the total assets at 36.32 percent, followed by quoted equities, which accounted for 20.70 percent investments in immovable property accounted for 19.66 percent, investments in guaranteed funds accounted for 13.68 percent.

Investment in alternative assets by schemes has gained traction with an inclusion of Private Equity & Venture Capital and Real Estate Investment Trusts (REITs) as separate assets classes constituting to around 0.04 percent and 0.09 percent of the total assets under management respectively.