Retirement Benefits Authority (RBA) say earnings surged by 11.6 per cent last year, compared to 7 per cent the previous year, benefiting pensioners on recovering stock market.

The gain was attributable to the gradual recovery in the stocks market following the adverse effects of the Covid-19 pandemic witnessed in 2020.

The performance helped protect retirement savings from erosion, as equity investments recorded the highest gain with the returns increasing by 27 percentage points to 16.9 per cent, from a 10.4 per cent dip recorded in 2020.

“The increase was largely supported by the performance of equities investments made by the schemes, which recorded a 16.9 per cent gain, up from a 10.4 per cent decline recorded in 2020,” RBA said.

Industry statistics

Industry statistics say 72 per cent of the assets were invested in fixed income especially government bonds, while 27 per cent was in equities and 2.2 per cent was invested in offshore.

Allocation towards equities asset class increased to 16.9 per cent in the first half of 2021, from 15.6 per cent in 2020, as investors sought to benefit from the recovery.

As most investors shift to relatively riskier asset classes offering higher returns, fixed income recorded a 3.2 per cent decline to 9.6 per cent in 2021, following a stable macroeconomic environment witnessed in 2021 as the economy continued to recover.

Cytonn analysts said fixed income has continued to offer stable returns, with little volatility over the years, but it has seen returns decline over the last 5 years from 14.5 per cent recorded in 2017 to 9.6 per cent.

“This is mainly attributable to the Central Bank of Kenya (CBK) and other stakeholders’ efforts over the years to maintain a stable interest rate environment,” Cytonn analysts said.

Offshore investments also outperformed the other asset classes in the period 2013 to 2021 averaging 13.6 per cent, while investments made in fixed income and equity asset categories averaging 12.2 per cent and 10.6 per cent, respectively.