Pension fund assets hit Sh2.2 trillion mark, driven by higher NSSF contributions

Pension fund assets have crossed the Sh2 trillion mark for the first time, with the rise linked to increased National Social Security Fund (NSSF) contributions and higher investment returns throughout 2024.

Data from the Retirement Benefits Authority (RBA) shows that total pension assets hit Sh2.207 trillion as of December 2024, marking a 27.9% rise from Sh1.725 trillion recorded in December 2023.

The sharp growth came amid the ongoing implementation of the NSSF Act 2013, which has led to higher mandatory contributions from employers and employees.

RBA attributed the growth to a combination of increased contributions and improved investment income, with each accounting for half of the gains made during the period.

“The growth in assets witnessed within the period emanated from contributions and investment income, each taking a 50% split. The increased contributions from members during the period are mainly attributable to the enhanced NSSF contributions that moved to year three of implementation,” said the Authority.

The NSSF Act was passed in 2013 but faced legal hurdles that delayed the increase in monthly contributions.

The first phase of the new rates began on February 1, 2023, when both employees and employers started contributing Sh1,080 each.

This was raised to Sh2,160 in 2024 and rose again to Sh4,320 in February this year, further boosting the NSSF fund.

As a result of the stepped-up contributions, NSSF assets grew by Sh77.71 billion, or 18.9%, in just six months, ending December 2024 at Sh478 billion, up from Sh402 billion recorded in June the same year.

The RBA figures also showed that NSSF collected Sh59.25 billion in contributions last year, which was 2.33 times more than the Sh25.39 billion it had collected in 2023.

Five main asset classes—government securities, guaranteed funds, quoted equities, listed corporate bonds, and immovable property—remained the dominant investment options for pension schemes.

Together, these accounted for 94.82% of all pension investments.

NSSF's own portfolio reflected similar investment priorities, with 67% of its holdings in government securities, followed by listed equities at 14.28%, immovable property at 7.43%, fixed deposits at 3.05%, unlisted shares at 1.98%, corporate bonds at 0.35%, and cash and demand deposits at 0.29%.

The sector saw notable growth in specific investment segments, with government securities increasing by 46%, helped by a rise in interest rates.

Quoted equities also recorded 42% growth, with the rebound in market performance especially strong in the final quarter of the year.

RBA said it expects the retirement assets to grow even further this year, supported by continuing contributions and returns on investments.