The value of pension cash held by the National Social Security Fund (NSSF) crossed Sh400 billion in the year ended June 2024, fresh data shows, buoyed by new higher deductions.
Data shows that pension cash held by NSSF stood at Sh402 billion, from Sh328.1 billion in December 2023.
This comes on the back of the revised contributions to the fund effective February 2024 which saw Tier I deductions bumped up from the previous Sh360 to Sh420, given the upward revision of the revised lower limit from Sh6,000 to Sh7,000, while Tier II deductions doubled from the previous Sh740 to Sh1,740 in line with the NSSF Act 2013.
Tier I deductions are those that apply to pensionable income up to Sh7,000. Tier II deductions are those that apply to pensionable income between Sh7,000 and Sh36,000.
“The total investments held by NSSF increased by Sh73.89 billion to stand at Sh402 billion in June 2024, up from Sh328.11 billion in December 2023. The NSSF internally managed assets amounted to Sh52.50 billion. The overall NSSF portfolio is heavily invested in government securities representing 67.9 percent of total assets”, the Retirement Benefits Authority (RBA) states in its latest report.
NSSF investing 67.9 percent of its funds in government securities means it is trending significantly above the pension industry’s average which stands at 51.1 percent invested in government paper.
Available data shows that on average, NSSF delivers a 2.5 percent gross annual return on members’ funds based on its performance for the period 2016/17 to 2021/22.
“The NSSF’s internally managed assets amounted to Sh52.5 billion as of June 30th, 2024 while externally managed assets increased by Sh70.8 billion to stand at Sh348.7 billion,”RBA says in its latest report.
The top three fund managers holding NSSF’s externally managed funds are African Alliance Kenya Investment Bank which holds the lion’s share at Sh77.9 billion followed by Gen Africa Asset Managers at Sh70.8 billion and then Cop-op Trust at Sh63.9 billion.
This means that between December 2023 and June 2024, African Alliance Kenya Investment Bank toppled Gen Africa Asset Managers from the top position in holding NSSF’s externally managed funds.
