Kenya Pension Industry: Assets up 1.8pc to sh1.3trn
Kenya’s Pension assets hit sh1.3trn, growth dimmed by Covid-19 effects
Kenya Pension industry: Overall Assets Under Management
In a report by the Retirement Benefits Authority, the retirement benefits assets under management increased by 1.88 percent from Kshs.1,298.19 billion in December 2019 to Kshs. 1,322.59 billion in June 2020.
Compared to the same period last year (June 2019) the assets grew by 6.24 percent, up from Kshs. 1,244.92 billion in June 2019 billion. The slow growth in the assets during the period can be attributed to the adverse effects of the Covid-19 pandemic which negatively impacted the financial markets and the wider economy. The fund managers and approved issuers held majority of the assets amounting to Kshs. 1,222.74.
The assets under management included Kshs. 193.08 billion of NSSF funds, which were managed by four (4) external fund managers. The National Social Security Fund (NSSF) internally managed a total of Kshs. 46.67 billion of investments (This includes property amounting to Kshs. 43.4 billion; fixed deposits, Kshs. 944.7 million; Cash and demand deposits, Kshs. 2 billion, and unlisted shares, Kshs. 332.8 million) , while the trustees of the various schemes directly managed Kshs. 53.17 billion of property investments.
The data of the internally managed property was extracted from the Schemes Financial Accounts for the 2019. The decrease in the internally managed property can be attributed to the directive issued by the Authority requiring schemes to relinquish the investment of scheme funds to fund managers.
The schemes continued to invest heavily in government securities with the asset class accounting for 43.99 percent of the total assets under management.
This was followed by immovable property which accounted for 18.61 percent; investments in guaranteed funds which accounted for 16.74 percent and investments in quoted equities which accounted for 14.17 percent. Investment in quoted equities dropped by 17.82 percent during the period, owing to the volatility in the stock market arising from the shocks emanating from the covid-19 pandemic.
Investments in listed corporate bonds, offshore, unquoted equities and REITS also dropped during the period. Investment in alternative assets by schemes has gained traction with an inclusion of Private Equity & Venture Capital as an assets class.
Investment in private equity and venture capital increased by 20.74 percent from 969 million in December 2019 to Kshs. 1.17 billion in June 2020 accounting for 0.09 percent of the total assets. The table below provides detailed aggregate investments by schemes by the various asset classes.
On average, all categories of investment were within the statutory investment limits
provided in the Retirement Benefits Regulations.
Kenya Pension industry: Assets held by Fund Mnagers and Approved Assuers
For the period ending June 2020, 18 fund managers3 and 17 approved issuers, submitted 1,222 scheme reports with a total fund value of Kshs. 1,222.74 billion representing 4.16 percent increase in the total assets under management up from Kshs. 1,173.85 billion in December 2019.
Compared to the same period last year (June 2019), this was 12.2 percent increase of which the total assets under fund management was Kshs. 1,089.71 billion. The total assets managed by fund managers amounted to Kshs. 1,001.35 billion while the approved issuers managed only Kshs. 221.39 billion.
Fund managers and approved issuers did not report any investments under the “any other asset class category” during the period. The drop in the investments under any other assets can be attributed to the introduction of new assets classes.
In terms of investments by specific fund managers and approved issuers, Sanlam Investments East Africa Company limited still remained the fund manager with the largest assets under management with total assets amounting to at Kshs. 229.78 billion which translates to 18.79 percent of the total assets under fund management. However, this was a drop compared to the assets under it management in December 2019, which stood at Kshs. 232.7 billion.
Kenya Pension industry: Top five fund managers
The top five fund managers during the period were (Sanlam Investments East Africa, GENAFRICA Asset Managers, Old Mutual Investment Group Limited, British –American Asset Managers Ltd and Coop Trust) managed the bulk of the investments with the total assets under management (AUM) amounting to Ksh. 877.4 billion accounting for 71.76 percent of the entire AUM.
The assets managed by Stanlib Kenya ltd dropped drastically during the period from Kshs.36.27 billion reported in December 2019 to Kshs. 1.47 million in June 2020 following its sale to ICEA Lion Assets Managers Ltd. The analysis considered each entity according to its registration hence, where a parent company has both an approved issuer and fund manager the two were considered as distinct entities.
ASSETS HELD BY NATIONAL SOCIAL SECURITY FUND (NSSF)
The total investments held by NSSF dropped by Kshs. 9.15 billion to Kshs. 239.72 billion in June 2020 down from Kshs. Kshs. 248.87 billion in December 2019. Out of the total assets of Kshs. 239.72 billion, Kshs. 46.67 billion7 was internally managed by NSSF.
The externally managed funds increased slightly over the period by Kshs. 1.38 billion from Kshs. Kshs. 191.7 billion in December 2019 to Kshs. 193.08 billion in June 2020. The British American Asset Managers Limited still held the bulk of the assets standing at Kshs. 76.29 billion representing 39.5 percent of the externally managed NSSF assets.
Kenya Pension industry: Future Outlook
The growth in the retirement benefits assets is expected to slightly increase in the second half of the year 2020 owing to the slow recovery of the stock market and the wider economy following gradual easing of the Covid-19 containment measures.
The schemes are also expected to continue to invest in alternative assets given the broadening of the allowable investment categories and take advantage of the public infrastructural projects and more so under the big four agenda.