Pinebridge grows retirement funds assets to Sh117bn

Workers put up a new signboard at the National Social Security Fund (NSSF) House during its re-branding last year. The pension industry had assets worth Sh548 billion as at end of last year. FILE 

By George Ngigi

In Summary

• Pinebridge becomes the first private fund manager to have a portfolio of more than Sh100 billion, compared to the NSSF’s asset base of Sh121 billion.
• The fund manager has focused on providing management services to retirement schemes of high-end companies which offer lucrative retirement packages to their staff.
• It recorded a weighted average return of 26.4 per cent on its investment last year, an improvement from 2011 when its asset value shrunk due to negative performance.

Pinebridge Investment’s portfolio of retirement benefits assets under its management has risen to Sh117.6 billion, nearly matching the statutory workers’ pension fund, NSSF.

Pinebridge becomes the first private fund manager to have a portfolio of more than Sh100 billion, compared to the National Social Security Fund (NSSF’s) asset base of Sh121 billion.

The fund manager’s portfolio has increased by Sh19.4 billion from Sh98.2 billion six months earlier, the Retirement Benefits Authority (RBA) said in a report released on Monday.

“The fund manager with the largest market share of retirement benefits assets remained Pinebridge with Sh117.6 billion of assets followed by Genesis and CFC Stanbic,” said RBA in the report.

Pinebridge has focused on providing management services to retirement schemes of high-end companies which offer lucrative retirement packages to their staff.

The improved performance of the private fund managers will put more pressure on the need for revision of the NSSF Bill, which seeks to increase the mandatory contributions to NSSF to up to six per cent of employees’ salary, with any other contribution above this being legible for the private schemes.

The proposal was has been criticised on the basis that it is likely to hurt the rest of the industry. The Bill had been tabled in parliament but was withdrawn to allow for talks among industry players.

The cabinet secretary nominee for labour, social security and services Kambi Kazungu has pledged to make the fund efficient while ridding it of corruption, which has seen it lose public confidence.

As at end of last year the pension industry had assets worth Sh548 billion, up from Sh497.5 billion in June with the 16 registered fund managers holding Sh436.7 billion while NSSF was managing Sh82.1 billion.

NSSF transferred Sh39.4 billion to the top six fund managers last year, with each getting an estimated Sh6.6 billion. The six are Old Mutual, Pinebridge, Co-op Trust, ICEA, Genesis and CFC Stanbic.

“Our service delivery has been good which has helped us attract new customers but there has been asset growth as well,” said Peter Wachira a senior investment manager at Pinebridge Investment East Africa.

The fund recorded a weighted average return of 26.4 per cent on its investment for last year, a huge improvement from the year 2011 when its asset value shrunk due to negative performance.

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 Co-op 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 and the NASI index Up 39.4 percent. In addition, schemes enjoyed increased valuations on their bond holdings as interest rates continued to decline,” said RBA.

 
(Read: Retirement schemes get lift from share price rally at NSE)

Individual members stood at 88,509 as at December up from 61,240 an year earlier. The membership was driven by the Mbao pension scheme which has over 39,000 members.

Mbao pension schemes aims at incorporating players in the informal sector. The members contributed Sh6.4 billion last year, but 2.9 billion was withdrawn compared to Sh2.2 billion withdrawn in 2011.

The launch of the Matatu Owners Association Pension Scheme later in the year is expected to further deepen the reach of the pension industry.

(Read: Retirement schemes get lift from share price rally at NSE)

Individual members stood at 88,509 as at December up from 61,240 an year earlier. The membership was driven by the Mbao pension scheme which has over 39,000 members.

Mbao pension schemes aims at incorporating players in the informal sector. The members contributed Sh6.4 billion last year, but 2.9 billion was withdrawn compared to Sh2.2 billion withdrawn in 2011.

The launch of the Matatu Owners Association Pension Scheme later in the year is expected to further deepen the reach of the pension industry.