Pension schemes miss out on 32.7pc offshore returns

Zamara chief executive Sundeep Raichura. FILE PHOTO | NMG

By PATRICK ALUSHULA
More by this Author

Summary

• The 2020 third quarter Zamara Consulting Actuaries Schemes Survey report shows that just 0.7 per cent or Sh6.45 billion of the Sh922.3 billion in the hands of 417 schemes was put in offshore investments.
• The 32.7 per cent returns from offshore investments for the year ending September is a rise from 2.4 per cent in a similar period last year.

Pension schemes have missed out on the lucrative 32.7 per cent return on offshore investments as conservative fund managers remained stuck with fixed income and equities in a Covid-19 environment.

The 2020 third quarter Zamara Consulting Actuaries Schemes Survey report shows that just 0.7 per cent or Sh6.45 billion of the Sh922.3 billion in the hands of 417 schemes was put in offshore investments.

The 32.7 per cent returns from offshore investments for the year ending September is a rise from 2.4 per cent in a similar period last year.

However, the significantly low allocation in offshore investment in comparison to the allowable maximum of 15 per cent cost schemes the lucrative returns at a time the returns on the traditional asset classes were declining.

Head of investment consulting team at Zamara Kenya, Neha Datta said slow decision-making has cost fund managers.

“This year has been spectacular for offshore returns. The recovery has been so strong since March but fund managers have missed out because it takes them long to make decisions,” said Ms Datta.

“Most schemes have allocated just between one and two percent of their assets to offshore investment so the impact of the good return on their portfolio is small. It is an opportunity lost.”

Returns from fixed income classes such as government bonds dropped from 14.2 per cent to 12.2 per cent while equities posted a negative return of 0.6 per cent in comparison to a positive return of 6.3 per cent in the year to September last year.