Regulator sets new test for pension managers

PHOTO | FILE Retirement Benefits Authority Chief Executive Edward Odundo speaking at a past event. According to Mr Odundo, trustees need to learn and understand current investments and their respective vehicles available to retirement schemes.  NATION MEDIA GROUP

By JOHN NJIRU jnjiru@ke.nationmedia.com
Posted  Saturday, November 10  2012 at  17:50

In Summary

• The new rule is part of industry-wide reforms being undertaken by the Retirements Benefits Authority (RBA)
• RBA requires that at least one of the top managers of a pension scheme takes the course by next month and that the others enrol in it before the end of 2013
• The programme was initiated with the help of Canada’s Humber Institute of Employee Benefits and the Association of Retirement Benefits Schemes
• So far, 512 trustees have taken the course, with the numbers expected to surge before the December deadlineinShare

Managers of all pension schemes will have to enrol in and pass a new insurance course by end of this year as a precondition for renewal of their practising licenses.

Offered at the College of Insurance, the Trustee Development Programme Kenya is designed to equip trustees with investment skills necessary to competently manage contributors’ funds.

The new rule is part of industry-wide reforms being undertaken by the Retirements Benefits Authority (RBA).

Next month

RBA requires that at least one of the top managers of a pension scheme takes the course by next month and that the others enrol in it before the end of 2013.

“Because of the growing role of a trustee, it is time they learn and understand about current investments and the respective vehicles available to retirement schemes,” said RBA’s chief executive Edward Odundo.

The programme was initiated with the help of Canada’s Humber Institute of Employee Benefits and the Association of Retirement Benefits Schemes.

According to the regulator’s chairman Kanyi Gachoka, the notice to managers was issued because of the increasing risks being observed in the investment portfolio.

“The investment of a retirement scheme assets can be considered the single-most important function of a trustee and at the same time the greatest area of exposure in case of negligent performance,” he said.

The programme will be rolled out to other members, sponsors and the trustees of trust corporations as RBA seeks to bring all the schemes into conformity with the law.

“They must all undergo through the training before being certified to engage in the provision of the trust services in the country,” added Mr Gachoka.

Open day

He made the remarks at the 10th RBA open day that was launched on Friday in Nairobi under the theme, “Owning your own home now using your retirements benefits”.

So far, 512 trustees have taken the course, with the numbers expected to surge before the December deadline.

The one-week course covers the concepts of funding and management of pension plans, governance issues, legislation regulating various schemes and the various investment mechanisms for funds.

Trustees have to achieve a 70 per cent pass mark for certification.

“By the end of next year, I am sure each and every trustee will have been certified which will be good for the pension industry,” said Mr Odundo.

Kenya is home to 13 individual pension schemes operated by independent financial institutions that are open to anyone who wants to save for retirement as well as 1,250 occupational registered schemes.

The industry’s value has grown to about Sh500 billion from about Sh50 billion in 2000.

Total assets grew by 4.5 per cent in 2011 to stand at Sh471 billion compared with Sh450 billion the previous year.

Assets base

The amount included Sh327 billion held by fund managers, Sh114 billion held by the National Social Security Fund and an additional Sh30 billion of property investments held by schemes but not under control of the fund managers.

During the two-day event, stakeholders learned about tax incentives, risk management and various retirements benefits options.

Meanwhile, the regulator is also eyeing the public school syllabus to introduce a mandatory course on retirement and pensions.

“The synergy of efforts bringing together the public and pension sector service providers will definitely bring clarity of our message and increase the number of retirement savers significantly,” said Mr Gachoka.