Pension fund assets surpass Sh2 trillion for the first time
The rise in assets under management to a record high was primarily driven by increased compulsory contributions to the NSSF in line with the ongoing implementation of the NSSF Act of 2013.
Pension fund assets have crossed the Sh2 trillion mark for the first time, lifted by higher National Social Security Fund (NSSF) contributions and improved investment returns in the year to December 2024.
Latest data from the Retirement Benefits Authority (RBA) shows the assets hit Sh2.207 trillion at the end of December last year, marking a 27.9 per cent growth from Sh1.725 trillion in the preceding period last year.
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The rise in assets under management to a record high was primarily driven by increased compulsory contributions to the NSSF in line with the ongoing implementation of the NSSF Act of 2013.
Additionally, pension schemes benefited from increased returns on investments, mainly in government securities, guaranteed funds, quoted equities and immovable property.
“The growth in assets witnessed within the period emanated from contributions and investment income, each taking a 50 per cent split. The increased contributions from members during the period are mainly attributable to the enhanced NSSF contributions that moved to year three of implementation,” RBA said in an industry brief.
The NSSF Act 2013 was passed in 2013, but the implementation of the section increasing monthly contributions from Sh400, split equally between employers and employees, was delayed until 2023 due to legal battles.
The first phase of increased NSSF deductions started on February 1, 2023, with workers and employers parting with Sh1,080 each, before rising to Sh2,160 last year. Effective February this year, the figure rose further to Sh4,320, ensuring a continued rise in the NSSF kitty.
The increased contributions during the year saw assets held by NSSF grow by Sh77.71 billion, or 18.9 per cent, in six months to close December last year at Sh478 billion, up from Sh402 billion as of June 30, 2024.
RBA data showed that contributions to NSSF hit Sh59.25 billion, a 2.33-fold rise from Sh25.39 billion in the prior year.
During the year under review, five traditional asset classes—government securities, guaranteed funds, quoted equities, listed corporate bonds, and immovable property- continued to dominate pension funds’ investments, accounting for 94.82 per cent of total pension assets across the six primary investment categories.
The NSSF portfolio mirrored the industry mix, with 67 per cent of assets invested in government securities, followed by listed shares (14.28 per cent), immovable property (7.43 per cent), fixed deposits (3.05 per cent), unlisted shares (1.98 per cent), corporate bonds (0.35 per cent), and cash and demand deposits (0.29 per cent).
Investments in government securities saw a significant 46 per cent increase, driven by rising interest rates, while quoted equities also recorded a growth of 42 per cent, supported by a market rebound, particularly in the last quarter of the year.
RBA expects the retirement benefits assets to record further growth this year.
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