RBA attributes slow growth of the pension assets to the pandemic

NAIROBI, Kenya, Jul 28- Retirement Benefits Authority Chief Executive Officer Nzomo Mutuku has attributed the slow growth in the retirement benefits assets during the second half of 2020 by 5.77 percent from Sh1.32 trillion to Sh1.39 trillion due to the adverse effects of the Covid-19 pandemic which adversely affected the financial markets and the wider economy in the first half of last year.

Addressing delegates who included fund trustees, regulators, and industry players during a two-day retirement conference, themed “Setting a strategy for retirement benefits provision in a post-Covid-19 world” – what we must learn from the pandemic and how we must apply that experience, said fund managers and approved issuers held a majority of the assets amounting to Sh1.29 trillion.

Schemes continued to invest heavily in government securities with the asset class accounting for 44percent of the total assets under management.

This was followed by immovable property which accounted for 17percent, investments in guaranteed funds 16percent and investments in quoted equities 15percent.

“Investment in quoted equities increased by 16percent compared to June 2020 owing to the rebound of the stock market after the effects of Covid-19 pandemic while offshore investments also recorded a jump from Sh5.92 billion to Sh11.38 billion, 92percent compared to June 2020,” Mutuku said.

The regulator attributed this to the depreciation of Kenya shilling against the dollar and schemes pursuing diversification due to the stock market volatility.

He said through market conduct regulation, promotion of consumer confidence by focusing on the way firms treat consumers, availability of information, and dispute resolution.

Director of Pensions at the National Treasury Michael Kagika said under the social security reforms the independence of the constitution is concerned with defining policies and protecting individual and fundamental rights of Kenyans.

Kagika said most Kenyans are not covered in spite of the many private insurers in place stating that there was need to provide the highest attainable standard of health, which include the right to health care services such as reproductive health care and free maternity under the universal health coverage.

“There is a need to fill the long term savings coverage gap for the informal sector as 20% of the labour force is almost exclusively in the formal sector. More than 15 million workers in the informal sector who contribute 34% to GDP are excluded,” he explained.

He said the current pension saving infrastructure does not cater for the unique needs of the marginalized sector as it was designed for the formal sector adding that the Government is establishing a National Informal sector pension scheme with a sustainable model that combines long-term savings with short-term needs.

Kingsland Court Group Executive Director Roger Urion challenged policy makers to move with speed in reviewing taxation policy for retirement savings. He said continued delay in adopting a forward thinking national retirement benefits policy and constant assault on the fundamental principle of saving for retirement are some of the key low moments the industry is facing.

“As a sector we must institute measures to ensure that if another crisis were to occur, we can face it with structured resources, capabilities, services and products that are stronger, more resilient, more flexible,” Urion urged.

Urion lauded the sector resilience and growth over the years and called for more regulatory and supervisory structures while appreciating the risks involved and management. “We also need to keep imagining and innovating products and services while paying closer attention to those in retirement,” he argued.