Treasury secretary Henry Rotich Photo www.youtube.com
Treasury secretary Henry Rotich has issued fresh guidelines on the asset class caps for pension schemes after the government introduced new investment categories including derivatives.Retirement schemes are now allowed to invest up to five per cent of their assets in listed contracts technically known as exchange traded derivatives, according to a gazette notice.Mr Rotich has also permitted pension funds to sink a maximum of 30 per cent of their portfolio into listed income-earning real estate securities, also referred to as real estate investment trust.Private bonds and commercial papers issued by privately-held firms are now eligible for a slice capped at 10 per cent of their holdings.The Retirement Benefits Authority (RBA) is betting on the new guidelines to unlock new opportunities in Kenya’s Sh1 trillion pension industry and generate higher returns to retirees.RBA chief executive Edward Odundo said pension schemes’ trustees should invest in a portfolio mix along the revised rules, and ensure diversification to limit exposure to risks.He, however, said that there has been poor uptake of alternative asset classes such as private equity, hence no justification to allot them a higher share in the mix.“The uptake has not been high for new classes such as private equity. We don’t see any need to change the ratios,” Mr Odundo said.