In
By GRIFFINS OMWENGA
Summary
- Research and development manager at RBA Nzomo Mutuku said that most of the schemes held a lot of cash in unpaid interest or dividend payments or received a lot of interest from government securities that was still lying idle as at December 2012.
The Retirement Benefits Authority (RBA) has said
various fund managers exceeded the legal idle cash limit which should
not be more than five per cent.
“There were increased transient breaches in the
cash category and were as a result of cash inflows at the end of the
period,” said RBA in a review of pension scheme operations for the
period June to December 2012.
Coop Trust and Old Mutual were the managers with
the most schemes in breach and, together, they accounted for 56 per cent
of all breaches.
Research and development manager at RBA Nzomo
Mutuku said that most of the schemes held a lot of cash in unpaid
interest or dividend payments or received a lot of interest from
government securities that was still lying idle as at December 2012.
“Though it goes against the investment guidelines,
the investment schemes are not allowed to have more than 5 per cent of
their total wealth in cash but that sometimes happens when a financial
year is closing as government and other entities pay their obligations
resulting in excessive idle cash,” said Mr Mutuku.
The total pension industry assets grew by 10.3 per
cent in the second half of 2012 to stand at Sh548.8 billion. It grew
from Sh117.4 billion in 2002.
The amount was composed of Sh436 billion held by
fund managers, Sh82.1 billion held by the National Social Security Fund
(NSSF) and an additional Sh30 billion of property investments held by
schemes but not under control of the fund managers.
“Part of the increase was as a result of the
transfer of previously self-managed NSSF assets to six of the fund
managers,” said the RBA.
The six are Old Mutual, Pinebridge, Coop Trust, ICEA, Genesis and CFC Stanbic.
ICEA asset management was the best performing fund
manager in 2012 with a 31.2 per cent return, which saw its assets rise
to Sh34.8 billion from Sh23 billion in December.
Other fund managers who disclosed their average
return include Coop Trust 25.8 per cent, African Alliance 22.7 per cent,
Madison 18.2 per cent and Dry Associates 15.1 per cent.
“The growth was driven by the good performance of
the Nairobi Securities Exchange with the NSE 20 share index closing the
year up 29.0 per cent.
In addition, schemes enjoyed increased valuations on their bond holdings as interest rates continued to decline,” said RBA.
Government securities constituted the largest
share of industry assets with 35 per cent of total assets, followed by
quoted equities at 24 per cent. The industry recorded double digit
growth in most asset categories with the only decline being seen in the
unquoted equity category.
Retirement benefit assets held by the 16
registered fund managers rose sharply by 21.6 per cent from Sh354.6
billion in June 2012 to Sh436.7 billion in December 2012. The rest are
managed by unregistered schemes.
According to RBA, the Individual Retirement
Benefits schemes sub-sector, though relatively new, has been one of the
fastest growing components of the retirement benefits industry.
The individual retirement benefits schemes
membership has grown tremendously from 25,289 members in June 2010 to
88,509 members in December 2012
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