Stock market wipes out Kenyan pensioners’ $350m in just three months

By DailyNewsUG Correspondent,

Kenyan retirees lost over Ksh35 billion ($350 million) to falling stock prices and soaring inflation as the Covid-19 pandemic wreaked havoc on the country’s economy in the past three months.

A survey conducted by Zamara Consulting Actuaries covering 415 pension schemes with a total of Ksh852.4 billion ($8.52 billion) in assets under management shows that the returns on pensioners’ investments in the three months to March 31 dropped, prompting a shift from equities to bonds.

“Pension funds have been heavily exposed to equities. And with this kind of downturn in the market, they are also heavily impacted,” Sundeep Raichura, Zamara Group chief executive, said in an interview last week with The EastAfrican.

“We have seen the average returns for pension schemes during quarter one decline by 4.2 per cent largely due to the poor performance of the equities market. Nobody knows how long this Covid-19 situation is going to last because it is an unusual situation. However, we expect a good rebound of the market if the situation normalises,” he added.

According to the findings of the survey released last week, the returns on equity and offshore investments dropped 23.9 per cent and 15.6 per cent respectively, during the period under review, while that on fixed income investments (Treasury Bills, Bonds and bank deposits) rose by 2.6 per cent.

At the end of the quarter, schemes had shifted about 75 per cent of their assets to fixed income investments, 18.8 per cent to equities, 5.7 per cent to property and 0.5 per cent to offshore investments.

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