For the current quarter, the average return achieved by the 418 pension schemes with total fund value of about Kshs. 740 Billion participating in the survey was -1.1% compared to 0.1% in the previous quarter. The negative performance would be expected to impact negatively on members’ benefits.
The negative return can mainly be attributed to negative returns on equity portfolios.
The highest performing scheme over the quarter recorded an impressive return of 5.7%.
Over the 3 year period, pension schemes have recorded a return of 10.7% p.a . The 3-year performance is a better gauge of performance as it would have smoothened the negative volatility of return.
It would be useful for trustees to engage better strategies in order to maximize members’ returns.
Compared to the previous quarter where the equities return was -8.0% , for this quarter the equity return dipped lower to -12.5%.
The fixed income and offshore asset classes did however achieve better quarter returns of 3.8% and 4.1% respectively compared to 3.5% and -0.5% respectively in the previous quarter.
For the current quarter, it was noted that pension schemes invested most of their funds in fixed income, increasing their allocation to 59.4% compared to 57.4% in the previous quarter.
A reduction in allocation to equities to 26.5% in the current from 29.3% in the previous quarter can be largely attributed to the negative returns achieved on the asset class.
Overall, ideal asset allocation is needed to ensure pension schemes can meet their targeted returns.
For a more detailed report on their performance, download the report here.Download