Concern as private fund overtakes National Social Security Fund

State-run National Social Security Fund (NSSF) has been surpassed in terms of portfolio size by AIG PineBridge, a private fund manager. This is according to a performance report published by the Retirement Benefits Authority (RBA), covering the period between June and December 2013.

With NSSF set to implement new contribution rates, pegged at Sh1,080 for those earning at least Sh18,000, poor performance of the State pension fund continues to cause jitters in the pension industry. Cases of looting and investment in white elephant schemes by well-connected corporate raiders remain unresolved.

This latest RBA report places PineBridge as one with the largest assets under its management, with 27.6 per cent of the market share at Sh156.1 billion of assets compared to NSSF’s Sh136 billion. Compared to the previous period, the top tier fund managers (AIG PineBridge, Genesis Kenya, CFC Stanlib Kenya, and OMAM Kenya) continue to account for 75 per cent of the total investments under management accounting for Sh422 billion.

“These are no good news to the Kenyan workers and no doubt a worrying trend to workers particularly coming at a time when the Government is pushing for the full implementation of the new NSSF Act 2013,” said Francis Atwoli, Central Organisation of Trade Unions (Cotu) Secretary General.

Figures from RBA show that total assets of the NSSF rose from Sh121.5 billion in December 2012 to Sh136.2 billion in June 2013 representing a 12 per cent growth in the total fund.

Of this amount, Sh92.9 billion was managed in-house and Sh43.3 billion by the registered fund managers. There was a Sh6 billion increase or a 16 per cent growth in the assets managed externally from Sh37.3 billion to Sh43.3 billion. Cotu has been pushing for the Government to initiate deliberate measures aimed at bringing on minimum reforms at NSSF in terms of its management and investment policy.

Court battles

But these calls appear to have been ignored with NSSF, employers and unions locked in constant court battles. “The fund is riddled and dogged with massive financial scandals leading to poor performance in terms of its assets’ growth coupled with corruption and overall misappropriation of members’ contributions,” said Atwoli in a statement.

RBA figures indicate that total assets in the pension industry rose by 9.9 percent in the second half of the year 2013 to stand at Sh696.68 billion as of December 31, 2013. Compared to last year, December 2012, the assets under management have grown by 27 per cent from Sh548.7 billion to Sh696.68 billion.

This amount was composed of Sh564.82 billion held by the fund managers and insurance issuers, Sh92.86 billion that is internally administered by NSSF and an additional Sh39 billion of property investments directly managed by scheme trustees. The assets under fund management included Sh43.4 billion of NSSF funds that are externally managed by the 6 contracted managers.