Polls hit pen­sion schemes hard in the third quar­ter

Av­er­age re­turn for funds in quar­ter was 4pc com­pared to 7.6pc in 2nd quar­ter of year

Business Daily (Kenya) - - MONEY & MARKETS - Charles Mwaniki cmwaniki@ke.na­tion­media.com

Eq­ui­ties re­turns for pen­sion schemes fell sharply in the third quar­ter on the back of neg­a­tive ef­fects of the po­lit­i­cal stand­off around the pres­i­den­tial poll.

An in­dus­try sur­vey by Ac­tu­ar­ial Ser­vices EA (Act­serv) for the pe­riod shows the re­turns fell to seven per cent com­pared to 18 per cent in quar­ter two, as re­turns for fixed in­come and off­shore in­vest­ments also came down.

The stock mar­ket was on a rally in the sec­ond quar­ter of the year, but was pulled back after dis­pute over the Pres­i­den­tial poll pro­longed the elec­tion amid un­rest in parts of the coun­try.

The elec­tion is yet to be con­cluded, with the Oc­to­ber 26 re­peat poll now the sub­ject of a fresh pe­ti­tion at the Supreme Court.

“Eq­ui­ties recorded an av­er­age three-month re­turn at seven per cent, a sig­nif­i­cant de­cline com­pared to the pre­vi­ous quar­ter’s re­turn of 18 per cent. This was at­trib­uted to the an­nul­ment of the re­sult dur­ing the quar­ter. How­ever, de­spite the an­nul­ment the eq­uity per­for­mance still re­mained pos­i­tive,” said the Act­serv sur­vey.

The funds were, how­ever, able to beat the NSE’S main in­dices dur­ing the third quar­ter.

The NSE 20 Share In­dex was up four per cent while the All Share In­dex rose 6.1 per cent in the three month pe­riod, com­pared to gains of 15.9 per cent and 17.2 per cent re­spec­tively in quar­ter two.

The av­er­age re­turn for pen­sion funds in the quar­ter was four per cent, com­pared to 7.6 per cent in the sec­ond quar­ter of the year. On an an­nu­alised ba­sis, the av­er­age re­turn stood at 14.4 per cent at the end of Septem­ber, owing to high eq­uity and off­shore re­turns in the sec­ond quar­ter of the year.

A sim­i­lar sur­vey done by pen­sion fund ad­min­is­tra­tor Za­mara (for­merly Alexan­der Forbes EA) shows that the av­er­age an­nu­alised re­turn in the one year to Septem­ber stood at 15.4 per cent.

De­spite the lower than ex­pected re­turns in quar­ter three, the funds are still on course to beat in­fla­tion this year of­fer­ing re­lief to pen­sioner sub­scribers.

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