Pension assets fall Sh33bn on bonds, equities hit

Pension industry assets under management shrank by Sh33.4 billion in the six months to June on the back of paper losses on equities and government bond holdings, representing the first half-year decline in retiree assets in 19 years.

Securities traders at the Nairobi Securities Exchange (NSE) in the past: Photo courtesy/ NMG


The Retirement Benefits Authority (RBA) said the contraction in the assets by 2.16 percent to Sh1.514 trillion was due to volatility in the financial markets and the political campaigns ahead of August’s general elections.


The value of government bond holdings by the industry fell by Sh16.6 billion to Sh690 billion, while that of listed equities retreated by Sh48.5 billion to Sh206.1 billion in the first half of the year.

Property investments in the period also dropped by Sh10.8 billion to Sh243.7 billion.

The paper value of government securities holdings has fallen in tandem with rising yields on the back of investor flight to western markets due to global economic uncertainties.

Bond yields in the secondary market show the rate that investors would be demanding for a similarly tenured instrument were it to be issued anew on the day. If yields rise, the prices of existing bonds tend to fall as investors push to sell to invest in the new high-paying issuances.

Global shocks, including the Russia-Ukraine war and high inflation in the West, have also been to blame for the uncertainty in the market which has pushed rate demands higher.

The US, UK, and EU have also been raising their interest rates in response to their inflation hitting multi-decade highs, with the effect of drawing capital from emerging and frontier economies such as Kenya.

In the equities market, share prices of blue-chip counters preferred by pension funds for their stability have fallen on the back of foreign investor exits.



“Investments in government securities, quoted equities, offshore and Reits recorded a drop during the period due to the dampened performance in the financial markets, unfavorable macroeconomic conditions, and the global uncertainties owing to the Russia-Ukraine conflict,” said the RBA.

“Investment in immovable property also dropped during the period partly due to disposal of property by some of the schemes to meet the statutory limit.”