Kenyan Pension Schemes Investment Recover from Covid -19 Shocks

Kenyan Pension Schemes Investment Recover from Covid -19 Shocks

Retirement Schemes’ returns continued the positive trajectory in the second quarter of 2021 with a median performance of a positive 5.4 percent compared to a positive 2.5 percent in the first quarter of 2021.

The improved performance was aided by strong performance in the equities market and offshore investments. The equity market posted positive performance at the end of the quarter as NASI & ZKEI gained 9.4% & 12.7%, respectively.

424 Schemes were covered in the Zamara Consulting Actuaries Schemes Survey (Z-CASS) in the second quarter of 2021, and the assets under management covered by the survey were at K Shs 976.8 billion.

The equity performance was mainly driven by gains recorded by large-cap stocks such as Safaricom, Equity Group, and EABL.

Safaricom Plc announced its entry into the Ethiopian telecommunications sector this quarter, which led to an all-time high price rally of K Shs 43.45 as investor sentiment improved .

The survey profiles schemes into categories based on their asset allocation. Aggressive schemes (schemes with a higher proportion of assets invested in Equity and offshore asset classes) had a median return of 6.1 percent compared to a 4.5 percent return for schemes with a lower allocation (schemes with a conservative risk profile).

Retirement schemes recorded strong performance with a median return of 15.9 percent over the one year ending 30 June 2021 compared to 7.6 percent in June 2020.

Performance in 2021 was positively impacted by the resilience in the equities market and offshore investments. Schemes invested in the two asset classes had an average return of 31.6 percent on the backdrop of positive investors sentiment aided by the measures placed by governments globally in curbing the harsh effects of Covid -19 pandemic

Retirement Schemes recorded an annualized median return of 10.6% over the three years and 12.0% over the five years.

These returns were driven by very stable fixed-income performance and improved performance from the equities and offshore investments.

Schemes were able to comfortably beat inflation over these periods, with inflation at 5.3% over the three years and 5.9% over the five years.