Stocks rebound lift pension scheme returns

Half of retirement schemes posted returns of 5.4 per cent in the second quarter of 2021 to extend gains of through the half year stage.

Greater returns for the pension assets have been attributed to the strong performance of the equities market and offshore investments in the period according to a new report by Zamara Consulting.

At least half of the surveyed schemes had posted returns of 2.5 per cent in the first quarter.

The equities performance has been driven mainly by large cap stocks including Safaricom, Equity and EABL which have led the recovery of the Nairobi Securities Exchange (NSE) from the 2020 downturn.

Across the six months, the primary Nairobi All-Share Index (NASI) has posted returns of 9.4 per cent.

In addition the rising returns, the 424 surveyed schemes have seen their assets grow to Ksh.976.8 billion from Ksh.902 billion albeit a lower number of participating schemes last year (421).

Returns by the return schemes continue to outpace the rate of inflation with the median gain over the past 12 months sitting at 15.8 per cent against an inflation rate of 6.3 per cent.

70.8 per cent of the schemes have a moderate risk profile indicating a balance between conservative and aggressive investment choices when allocating funds.

In one year, aggressive schemes have led in returns having posted a weighted average gains of 17.4 per cent ahead of moderate schemes at 16 per cent.

Conservative schemes which have the bulk of assets allocated to fixed income posted a return of 13.9 per cent.

Returns from the equity market have tied those from offshore investments at an average 31.6 per cent across 12 months while fixed income has had much lower returns at 11.4 per cent.

Allocations to the higher yielding equity and offshore investments have risen through the second quarter as those made to fixed income and property decrease.