The National Social Security Fund (NSSF) has reported a paper gain of Sh2.98 billion on its assets in the year to June 2024, compared to a loss of Sh18.44 billion the previous year following a jump in the value of equities and bonds portfolio.
The State-controlled pension fund invests in a mix of blue chip stocks at the Nairobi Securities Exchange (NSE), but its largest exposure is on long-term government bonds.
In the period, the valuation of its listed equities rose by Sh8.2 billion to Sh61.19 billion, while the value of the bonds portfolio was up by Sh67.2 billion to Sh253.8 billion.
The increase in the values of the shares and bonds was a result of revaluation and additional purchases of new securities from its larger pile of member contributions.
On the equities market, the large blue chip firms at the NSE recorded a growth in prices between January and June 2024, as the market began to rise from a prolonged bear run following the resolution of dollar supply hitches that had spooked foreign investors.
The four largest listed firms—Safaricom, Equity Group, EABL and KCB Group—recorded price gains of between 25 and 42 percent in the six-month period, boosting the paper gains for the NSSF.
Overall, NSSF’s net investment income grew by 238 percent or Sh29.4 billion to Sh41.7 billion, setting up pension savers under the fund for higher returns when they are declared for the year.
“The Fund’s investment assets earned a net return of 12.02 percent in June 2024 compared with 4.24 percent recorded in June 2023,” said the NSSF in its abridged financial statements for the 2023-24 financial year.
The NSSF was also able to call on a wider pool of cash for its investment activity in the period after remitted member contributions more than doubled to Sh62.3 billion from Sh26.87 billion in 2023, courtesy of the enhanced statutory deductions under the NSSF Act of 2013. This pushed the total assets under management under NSSF to Sh402 billion, up from Sh313.9 billion in June 2023.
Contributions to the fund were enhanced starting February 2023 following the implementation of the NSSF Act 2013 after a decade-long court battle.
The new rates kicked in with an increase of a member’s ceiling contribution from Sh200 per month to Sh1,080 —matched by the employer— in the first year. In the second year, starting February 2024, the rate was raised to Sh2,160, before going up again to Sh4,320 starting February 2025.
Next year, the contribution cap will go up further to Sh6,480 per month, and finally to Sh8,640 per month in 2027.
This means that the fund can expect to see organic growth of investable funds in the next three years, potentially raising its investment income should market conditions remain friendly.
