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Boost: Kenya’s retirement savings to attract 7 per cent interest

National Social Security Fund acting managing trustee Anthony Omerikwa. (NMG PHOTO)

NAIROBI – Kenya’s state-run pension scheme, the National Social Security Fund (NSSF), has increased interest payable on retirement savings to seven per cent for the year ended June 2017 on the back of a sharp rise in net investment income, Business Daily has reported.

The return is a rise from the six per cent posted in 2016 and three per cent it paid on savings in the year to June 2015. This is a rise for three consecutive years.

This was due to the rise in net investment income to KSh20.4 billion in the year to June 2017 from KSh1 billion a year earlier aided by dividends from firms where the Fund has stakes. It also resulted from trading of shares and bonds at the Nairobi Securities Exchange.

The higher NSSF payout came as workers’ contributions to the Fund increased 5.4 per cent to KSh13.5 billion and it paid out KSh3.6 billion to those retired. This means that NSSF was left with KSh9.8 billion to invest on behalf of pension savers in 2017, up from KSh9.7 billion a year earlier.

Uganda’s impressive performance

The Nairobi development comes barely three months after Uganda’s NSSF announced on August 28, 2018 an interest payout of 15 per cent on members’ savings for the financial year 2017/2018.

The interest rate for the year equates to UGX 1.1 trillion paid out in interest to members of the Fund. This is the very first time in the Fund’s history that the Fund has declared 15% interest rate to its members.

The announcement came on the heels of the Fund’s declaration of an impressive performance on key financial indicators for the Financial Year 2017/2018, with total income hitting a record UGX 1.6 trillion before interest to members and taxes with the fund’s total Assets Under Management hitting a record UGX 9.98 trillion as at June 30, 2018, a 26% increase from UGX 7.92 trillion the previous Financial Year.

The 15% interest rate is attributed to the Fund’s improved performance on all financial and investment indicators, arising out of strategic exploitation of the investment environment within the region, despite modest growth in the economy over the same period.

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