MPs’ pension scheme moves to reduce investments in Kenya

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MPs’ pension scheme moves to reduce investments in Kenya
The MPs' scheme’s chairperson, Board of Trustees, Arinaitwe Rwakajara

KAMPALA | The Parliamentary Pensions Scheme (PPS) is considering a reduction of the scheme’s equity investments in Kenya in favour of local market. 

This was revealed by the scheme’s assets manager, GenAfrica, during the Pension Scheme’s 12th Annual General Meeting on Friday.

According to the scheme’s annual report and financial statements for the year ended June 30, 2023, the scheme’s total equity assets stand at Shs24 billion,  of which 2 percent is in Kenya.

Escar Namirembe, from the assets managing firm GenAfrica, noted that the macroeconomic challenges in Kenya continue to dampen the stock market outlook despite positive earnings, attractive dividends and valuations.

“We therefore propose to reduce allocation on stocks listed on Nairobi Securities Exchange and selectively reallocate to stocks on the Uganda Securities Exchange with focus on companies with attractive dividend yields and valuations,” said Namirembe.

Further to that, the amended PPS Act allows mid-term access and it is against that background that Namirembe said that to tackle anticipated liquidity from mid-term access, as well as the upcoming general elections in 2026, GenAfrica will consider allocation of short to mid-term government securities of two to three years.

“The strategy will hinge on liquidity management for both mid-term access and the significant liquidity event anticipated for 2026,” she said.

The scheme’s current government bonds investment stand at Shs236 billion.

Namirembe added that there will be increased allocation to unit trusts, whose current investment portfolio is Shs36 billion.

“We shall increase allocation to unit trusts to re-align the portfolio to the investment policy statement,” said Namirembe.

In her speech, delivered by Deputy Speaker Thomas Tayebwa, Speaker Anita Among said the gross investment income of Shs55 billion and total assets of Shs425 billion indicate a good performance of the scheme, amid the slow recovery of the economy.

“Our desire as the Parliamentary Commission has been and will remain that members live a quality life in retirement," Among said.

"The board must therefore ensure that the fund is prudently managed and benefits efficiently paid out to the satisfaction of the members consistently."

The Speaker, however, cautioned members against accessing funds under the mid-term access for expenditure, but rather for investments.

Tayebwa noted that with the volatility in markets, PPS has performed well because the scheme made a good decision to invest in treasury bonds, as opposed to equities.

“The equity market in the region is still very volatile but we are counting on pension schemes to grow our nascent equity market as a government,” he said.

The Chairperson, Board of Trustees, Arinaitwe Rwakajara attributed the Scheme’s growth in assets from 349 billion in 2021/2022 to Shs425 billion in 2022/2023 to growth in investment return and slight increase in membership.

“The Board invested member’s funds in the most prudent way as guided by the investment policy statement. I would like to thank the government for keeping the inflation in check amidst the regional and global inflation pressures. Low inflation preserves the value of member’s funds,” he said.

The PPS Chief Operations Manager, Nightingale Mirembe, however decried the laxity in updating of files, saying that members risk losing out on benefits.

“Come and update your files, otherwise your families will suffer when you pass on,” said Mirembe.

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