Pension in Kenya

The pension industry in Kenya grew 4.4 per cent to stand at Kshs470.6 billion ($5.54 billion) as at June 2011, with Kshs113.5 billion held by NSSF, Kshs326.9 billion ($3.85 billion) by fund managers and Kshs30.2 billion ($355.3 million) in property investments not controlled by fund managers.

As at December 2011, however, pension managers lost Kshs17 billion ($200 million), the first drop since industry regulator Retirements Benefits Authority was started in 2002. The contraction was as a result of the drop in the value of pensions assets from Kshs420 billion ($4.941 billion) in December 2010 to Kshs403 ($4,741 billion) in December 2011. The drop was caused by the lowered earnings of equity investments at the Nairobi Securities Exchange and the steep rise in interest rates which devalued government securities held by fund managers.

The industry‘s average return on investment dropped to negative 9.9 per cent. In 2009, the return stood at negative 4.28 per cent The industry comprises the dominant NSSF, 1,077 registered schemes, 23 registered individual schemes, 64 unregistered individual schemes, the Civil Service pension scheme, 16 fund managers, 26 administrators, 12 custodians and six actuarial service providers. Fifteen per cent of the working population is covered by the schemes, with NSSF taking 67 per cent, the Civil Service scheme 22 per cent, private schemes 10 per cent and individual schemes one per cent.

In addition, a pension increase at the average inflation rate capped at a maximum of three per cent is granted every two years. Future pension increase is now guaranteed as the Government has set a precedent because the three per cent biennial increase is in the law.

In the 2011/12 Budget, The Treasury removed the need to appoint a fund manager so as to lower the administration costs for pension schemes and grow their asset base, by amending the law to remove the requirement for appointing fund managers by schemes that invest all their funds in guaranteed funds.

In the same document, the restriction under the NSSF Act on imprisoned persons from receiving any payment in respect of benefit while in legal custody was removed and is expected to free resources for use by affected families. The changes are contained in Legal Notices Nos. 49 and 50, of lime 8, 2011 and the Finance Bill 2011.

Staff Pension Scheme Inflation

The monetary objective of the Treasury and Central Bank is to keep inflation low and stable, with a core inflation target of five per cent. Temporarily, CBK has revised the target to nine per cent following supply shocks.

Over the past five years, the Government pursued stringent macro-econornic policies that eased inflationary pressure on the economy, but this has become a challenge of late as oil prices and food supply overwhelmed regional and global policy makers. Consequently, overall inflation decreased from 14.5 per cent in December 2006 to 9.8 per cent in December 2007. However, inflation rose in 2008 and the first half of 2009 on account of high food and energy costs. But in 2009, inflation eased to 9.2 per cent from 16.2 per cent the previous year. This was occasioned by reduction in fuel and food prices.

Overall inflation in 2010 stood at 4.1 per cent. But for most of 2011, it persisted at double-digit rates, averaging 14 per cent in the year, as fuel and food prices remained a challenge in the Wake of the Middle East and North Africa political uprising and poor weather conditions in Kenya and the eastern Africa region. The Euro zone-crisis triggered depreciation of the shilling. The 12 month non-food, nonfuel inflation also escalated in 2011 from 1.34 per cent in January 2011 to 10.76 per cent in December 2011.

Private consumption Total consumption in 2011 stood at Kshs2,350,129 rni1lion($27,650) compared to Kshs1,983,496 million ($23,335) in 2010 and Kshs 1,849,582 ($21,760) in 2009. Food and beverages component stood at 46.9 per cent compared to 44.0 per cent in 2010.

Registered Pension Administrators in Kenya

1. Alexander Forbes Financial Services
2. Aon Kenya Insurance Brokers
3. Apollo Life Assurance
4. British-American Insurance Company
5. CFC Life Assurance
6. Chancery Wright Insurance Brokers
7. Eagle Africa Insurance Brokers
8. ICEA Trustee Services
9. Kenindia Assurance Company
10. Kingsland Court Benefits Services
11. LAPTRUST Administration Services
12. Liaison Financial Services
13. Liberty Pension Services
14. Madison Insurance Company Kenya
15. Mercantile Insurance Company
16. Octagon Pension Services
17. Pacific Insurance Brokers
18. Pan Africa Life Assurance
19. Roberts Insurance Brokers
20. Sapon Insurance Brokers
21. Sedgwick Kenya Insurance Brokers
22. The Heritage Insurance Company
23. The Jubilee Insurance Company of Kenya
24. The Kenyan Alliance Insurance Company
25. The Monarch Insurance
26. Zimele Asset Management Company

Registered pension custodians in Kenya

1. Bank of Africa
2. CFC Stanbic Bank
3. Chase Bank (Kenya)
4. Equatorial Commercial Bank
5. Equity Bank
6. Kenya Commercial Bank
7. National Bank of Kenya
8. NIC Bank
9. Prime Bank
10. Standard Chartered Bank
11. The Co-operative Bank
12. Trans National Bank Limited

Unregistered individual pension plan providers in Kenya

1. National Social Security Fund
2. Baumann 8 Co. Limited Staff Retirement Benefits Scheme
3. Sian Agriflora Limited Staff Provident Fund
4. St James Hospital Staff Retirement Benefits Scheme
5. Outward Bound Trust of Kenya Staff Pension Scheme
6. Credit Traders Staff Retirement Benefits Scheme
7. Eveready Batteries Kenya Limited Staff Provident Fund
8. Mackenzie Maritime Co. Staff Provident Fund
9. H. W. Gichohi and Co. Staff retirement Benefits Scheme
10. United Finance Limited Staff Retirement Benefits Scheme
11. Insight Technologies Limited Staff Pension Scheme
12. Leisure Lodges Limited Retirement Benefits Scheme
13. Kenya Institute for the Blind Staff Pension Scheme
14. African Regional Organisation for Standardisation Staff Pension Scheme
15. Pyrethrum Board of Kenya Staff Retirement Benefits Scheme
16. Presbyterian Church of East Africa Provident Fund
17. Nyasare Water Supply Association Staff Retirement Benefits Scheme
18. General Marketing Services Ltd Staff Retirement Benefits Scheme
19. African Tours and Hotels Limited Staff Retirement Benefits Scheme
20. Kenya Power and Lighting Company Ltd Staff Provident Fund
21. African Retail Traders (K) Limited Retirement Benefits Scheme
22. Dawa Pharmaceuticals Ltd Staff Retirement Benefits Scheme
23. Intrahealth International Inc – Staff Retirement Scheme
24. Kenya Flourspar Company Limited Pension Scheme
25. Methodist Church in Kenya Superannuation Fund
26. Community Education Concern Staff Retirement Benefits Scheme
27. Stallion Insurance Non-Management
28. Staff Retirement Benefits Scheme
29. Stallion Insurance Management Staff
30. Retirement Benefits Scheme
31. Scientronics International Staff Retirement Benefits Scheme
32. Diocese of Eldoret CPK Staff Retirement Benefits Scheme
33. Lakestar Insurance Company Ltd Scheme
34. Concord Insurance Co. Limited Staff  Provident Fund Scheme
35. Kenya Co-operative Creameries Royal
36. Guardians Fund
37. Payless Car Hire 8Tours Limited Staff
38. Retirement Benefits Scheme
39. United Touring Company (UTC) Retirement Benefits Scheme (unregistered)
40. Highlands Paper Mills Staff Retirement Benefits Scheme
41. Fundilima Sacco Staff Retirement Benefits Scheme
42. Peugeot Sacco Staff Retirement Benefits Scheme
43. Masaba Hospital Staff Retirement Benefits Scheme
44. Kenya Baptist Theological College Staff
45. Retirement Benefits Scheme
46. United Insurance Company Limited Staff
47. Retirement Benefits Scheme
48. Mumias Outgrowers Limited Staff Retirement Benefits Scheme
49. Kenya Co-operative Creameries Limited
50. Junior Pension Scheme
51. Maua Methodist Hospital Sacco Ltd.
52. Staff Provident Fund
53. Improve Your Business Staff Retirement Benefits Scheme
54. Gragaab Agencies Staff Retirement Benefits Scheme
55. Computer Associates Staff Retirement Benefits Scheme
56. Kerenga Sacco Provident Fund
57. Meru Mwalimu Co-operative Savings and Credit Society Limited Staff‘ Provident Fund
58. Ndosha Sacco Staff Provident Fund
59. Mombasa Teachers Savings and Credit
60. Co-operative Society Limited Staff Provident Fund
61. Utabibu Co-operative Savings and Credit
62. Society Limited Staff Provident Fund and
63. Life Assurance Scheme
64. Brookside Dairy Limited Staff‘ Retirement Benefits Scheme
65. Kenya Vehicle Rental Limited Staff Provident Fund
66. Mechanised Cargo Systems Limited Staff Provident Fund
67. Kima Integrated Community Base Programme Staff Provident Fund Scheme
68. Kiambaa Division Co-operative Veterinary Services Ltd Staff Provident Fund
69. Kenya Medical Research Institute Staff Retirement Benefits Scheme
70. Kenya Institute of Administration Staff Retirement Benefits Scheme 2009
71. ICEA Umbrella Retirement Benefits Scheme
72. Mizizi Individual Pension Plan
73. UBA Kenya Bank Limited Staff Retirement Benefits Scheme
74. Southern Sky Safaris Limited Staff Pension Scheme
75. Interim Independent Electoral Commission (IIEC)

Registered individual pension schemes in Kenya

1. Alexander Forbes VunaPension Plan
2. CFC Life Assurance LimitedIndividual Pension Fund
3. Apollo Insurance CompanyLtd Individual Retirement Benefits Scheme
4. British American Insurance Company (BRITAK) Personal Pension Plan
5. British American Insurance Company (KENYA) Limited Individual Pension Fund
6. CFC Life Assurance Limited Individual Provident Fund
7. I.C.E.A Individual Retirement Benefits Scheme
8. The Heritage A.I.I Insurance Company Ltd Individual Retirement Scheme
9. The Kenya Alliance New Life Individual Retirement Benefits Scheme
10. The Monarch Insurance Company Individual Pension Plan
11. UAP Provincial Insurance Company Ltd Individual Retirement Benefits Scheme
12. Prudential Pension Plan
13. Zimele Personal Pension Plan
14. Amana Personal Pension Plan
15. Blue Shield Personal Pension Plan
16. Jubilee Insurance Company Personal Pension Plan
17. Kenindia Individual Personal Pension Plan
18. Madison Insurance Personal Pension Plan ‘
19. Pan Africa Life Personal Pension Plan
20. Octagon Personal Pension Plan
21. Pioneer Assurance Company Personal Pension Plan
22. CIC Individual Pension Plan
23. Liberty Personal Pension Plan