The National Social Security Fund (NSSF) has dropped Old Mutual Asset Managers, Sanlam Investment East Africa, and CIC Asset Management from its list of external fund managers, denying the firms millions of shillings in fees.
The three fund managers, who held a combined Sh136 billion on behalf of the fund as of June 2024, have been dropped after reportedly failing to meet technical requirements during NSSF’s last round of procurement for the provision of investment management services.
The NSSF traditionally recruits external fund managers every three years and assesses their performance annually to confirm whether the service provider is offering satisfactory services before renewal.
The fund sought investment management services for its next three-year cycle last May in a process that concluded in the termination of the three firms as external asset managers.
“The three fund managers were terminated as external fund managers having failed to meet some of the technical requirements in the tendering process,” said a source at the NSSF who is not authorised to speak to the media.
The Business Daily reached out to NSSF for comment on the exit of fund managers but had obtained response by press time.
The exit of the three fund managers has boosted the assets under management of three other fund managers who remain authorised to provide the NSSF with investment management services including Gen Africa Asset Managers, African Alliance Kenya Investment Bank Limited, and Co-op Trust.
African Alliance Kenya Investment Bank has been the greatest beneficiary of the fund managers change having more than doubled its base of NSSF-managed assets to Sh171.7 billion as of December 2024 from Sh77.9 billion in June.
Gen Africa meanwhile saw its base of NSSF-managed assets nearly doubled to Sh133.5 billion from Sh70.8 billion previously.
Co-op Trust managed Sh119.4 billion in assets on behalf of the NSSF in December 2024 from Sh64 billion in June.
The value of assets externally managed by the NSSF rose from Sh348.7 billion to Sh424.6 billion in six months to December 2024.
The growth in assets which is primarily due to higher member contributions has set up the three remnant external managers for greater income from the expansion of their assets under management.
The NSSF paid Sh319.1 million as fees to fund managers in the financial year ended June 2024 from an externally managed asset base of Sh190.2 billion, implying a 0.31 percent charge.
This implies that Gen Africa, African Alliance, and Co-op Trust would have earned about Sh1.3 billion for managing the Sh424.6 billion assets on behalf of the NSSF in 12 months to December 2024.
Total net assets held by NSSF including both the internal and externally managed funds stood at Sh476.8 billion where internally managed assets were at Sh52.2 billion and included Sh38.6 billion immovable property investments while the balance contained intangible assets, inventories, staff mortgage schemes, accrued income, receivables and staff car loans.
“Contributions to NSSF have been on a steady growth over the last three years. The increase in contributions is attributed to the continued implementation of the NSSF Act of 2013,” the Retirement Benefits Authority (RBA) said in its latest industry report.
Enhanced NSSF contributions entered their fourth year of implementation in February this year where the highest member contribution to the fund was raised from Sh2,160 to Sh4,320.
The fund is expected to consider opening the tender for the provision of investment management services to recruit new managers in the backdrop of the rapidly expanding NSSF contributions which presents the need for further risk management by the State-run agency.
