Why RBA is likely to miss Sh2.4tr asset base target by 2024

FUNDING: Low funding among public sector schemes will deny the Retirement Benefits Authority (RBA) the momentum to grow its asset base to Sh2.4 trillion by next year.

Anne Mugo, the director in charge of market conduct and industry development, said the regulator which started in 1997 has grown to Sh1.6 trillion, against its target of Sh2.4 trillion by 2024 as per its 2019-2024 strategic plan.

“Public sector schemes which are lagging behind with a deficiency of Sh35.3 billion and partial access of benefits before retirement which is 50 per cent of the accrued funds are some of the challenges hampering the sector growth,” she said.

Mugo noted that continued review of the reforms at the regulator are aimed at enhancing pension coverage in the country up from 25 per cent. among Kenyans.

She also said unremitted contribution by sponsors is also posing a serious challenge to the growth of the sector. The informal sector, Mugo observed, was the largest employer in Kenya with about 86 per cent contributing significantly to about 18 per cent of the gross domestic product (GDP), However, the sector faces either low incomes or irregular contribution hindering sector growth.

While addressing delegates drawn from industry in Kwale County, Kingsland Court Chairman David Nyakundi said the ongoing global discussions on climate change and its impact on humanity it is important for the retirement benefits industry to recognise and play its part in the on-going discussion.

“Critical in pension governance is asset management otherwise a contributory pension fund will not be able to meet its objectives”, he explained. Trustees and asset managers have traditionally pursued private interests of the pension scheme which is to maximise investment returns without regard to wider public interests associated with pension asset management.