Nairobi — The National Social Security Fund (NSSF) has posted a 22 percent jump in the value of its investment portfolio in 2013 as its total net assets grew from Sh110 billion in 2012 to Sh135 billion in the year ended June 2013.
NSSF Chairman Adan Mohamed attributed the growth to governance and financial reforms the Fund has been carrying out over the last five years including outsourcing investment of workers' contributions.
"The reforms we are currently undertaking have set the NSSF on a firm growth trajectory. The ongoing implementation of the NSSF Act 2013 is the most significant of a raft of reforms that commenced in 2009, and which are now beginning to yield fruit," said Mohamed.
The NSSF Act 2013 replaced the old NSSF Provident Fund and created two new funds, the NSSF Pension Fund targeting mostly employees in the formal sector and civil servants, and the NSSF Provident Fund to cater mainly for the self-employed and informal sector workers.
Mohamed said that contributors to the Fund will now earn 12.5 percent interest on savings, up from the current 7.5 percent.
"Our contributors will be the biggest beneficiaries of this stellar performance," said Mohamed.
The Fund has also appointed independent fund managers to manage its vast asset portfolio unlike in the past when this was purely a function of the management.
"Our investment returns have grown by between 17-20 percent since the fund managers came on board unlike previously when investment was an internal function," said NSSF Managing Trustee Richard Langat.
A re-alignment of its portfolio to comply with legal provisions capping investment in land and property at 25 percent has seen NSSF land and property holdings decrease to Sh29 billion in June 2013, from Sh35 billion in 2012.
Langat says the Fund has not bought any land or property over the last 10 years unlike in the past.
The fund has shifted focus to other asset classes such as Quoted, Unquoted Stocks, Government Securities and Commercial Paper with a combined value of over Sh87 billion which represents 67 percent of the Fund's total portfolio as at June 2013 up from Sh64 billion the previous year.
The Fund has invested Sh200 million in a new ICT system to optimize contribution collection and benefits payment by curbing leakages and delays in claim settlement.
Implementation of increased pension savings rates as stipulated in the new Act is expected to boost workers' contributions to Sh120 billion per annum by 2019 from the current Sh8 billion per annum.
The new rates, which are the subject of a pending court case, will be implemented over a five-year period.
Currently, NSSF has over 1.7 million members and is targeting to increase this number to 3.8 million by 2019 through broadening coverage to the public service and informal sectors.