Pension fund assets rose by Sh127 billion in the first half of this year, boosted in part by the introduction of higher mandatory contributions to the National Social Security Fund (NSSF) and exchange gains on offshore investments.

The 8.1 percent growth to Sh1.704 trillion was also boosted by new investments in Real Estate Investment Trusts (Reits), including the Sh6.92 billion Laptrust Imara Investment Reit (I-Reit) which was listed on the Nairobi Securities Exchange (NSE) in March.

Read: Pension funds fail to beat inflation during 2022

The data provided by the Retirement Benefits Authority (RBA) shows that the large asset classes such as government securities and fixed deposits also recorded a jump in value during the period, partly out of a reallocation of funds from listed equities which continued to struggle.

The growth in overall assets under management this year is in contrast with the 2.1 percent contraction (to Sh1.515 trillion) seen in the first half of 2022, which was due to fair value losses on property, equities and government bonds.

“The growth of the assets during the period is partly attributed to the enhanced contributions to the mandatory scheme, NSSF, which began in earnest in February 2023 following the Court of Appeal ruling and the improved performance of the offshore assets arising from the exchange rate fluctuations,” said the RBA.

“The schemes continued to invest heavily in government securities which accounted for 47.79 percent of the total assets under management. This was followed by guaranteed funds which accounted for 19.19 percent.”

Following the implementation of the enhanced contributions for the NSSF, the total investments held by the State-owned fund rose by Sh12.61 billion to Sh308.26 billion in June.

The fund manages Sh46.6 billion out of this asset base on its own, with the remaining Sh261.65 billion being overseen by six private fund managers—the largest portion being held by Gen Africa Asset Managers at Sh58.9 billion.

The NSSF Act, 2013, whose implementation started in March this year, increased salaried employees’ monthly deductions from Sh200 to Sh600 for the lowest earner and from Sh320 to Sh1,080 for top earners under a graduated scale.

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