Kenya’s retirement benefits eroded by coronavirus
Pension managers in Kenya project depressed growth of retirees’ funds due to the coronavirus pandemic that has negatively impacted the financial markets.
About 17.5 per cent of retirees’ money was invested in quoted securities at the Nairobi Securities Exchange as at December 2019. This amounted to $2.1 billion, up from $1.8 billion in 2018. In its 2019 industry report, the Retirement Benefits Authority (RBA) said: “The growth in the retirement benefits sector is projected to drop in the first half of 2020 given the effects of Covid-19, which has in the shortest time negatively impacted the financial markets and is postulated to significantly affect the global economy.”
Last week Kenya’s stock market plunged to a 17-year low with the NSE 20 Share Index nose-diving to 1,958.5 points, down from 2,666.9 points in January.
The report shows that efforts to encourage pension and fund managers to invest in new asset classes are not bearing fruit as most schemes continue to prefer traditional asset classes. The lack of risk appetite by scheme managers throws into disarray plans by the Kenyan government to tap into pension funds to finance infrastructure projects.
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