CIC subsidiary licensed to manage RBA pension funds

Pension fundsThe Retirement Benefits Authority (RBA) has authorised CIC Asset Management, a subsidiary of CIC Insurance Group, to manage pension funds.

The subsidiary which plans to go ahead on partnerships with co-operatives and investment clubs across the country to grow its business became operational in mid 2011.

The CIC Asset Management managing director, Peter Mwaura, said that they wanted individuals and corporates to enjoy the benefits of pension funds to run professionally.

He said that the firm would use information and communication technology (ICT) to reduce the cost of doing business and pass on benefits to customers. The fund manager hopes to grow its portfolio quickly, taking business from its unit trust business which had done KSh. 2.4 billion last year. On Wednesday, the parent company traded at KSh. 4 per share with 281,600 stocks traded.

With the fast growing middle class, the amount of contributions to pension funds is predicted to grown in the country with co-operative and Chamas providing an avenue for fund managers to market to the masses.

Mr. Mwaura said that they had established a sales force that would search the market for pension schemes that are not being run professionally so that they could turn them into funds that would generate more wealth for pensioners.

The RBA has also introduced the Mbao Pension Scheme which would help to increase the saving culture among people who are at the bottom of the pyramid.

CIC Asset Management would be joining other 17 fund managers licensed till December 2011, in an industry which has assets worth KSh. 403 billion. Pinebridge is the largest fund manager, followed by Genesis and CfC Stanbic.

The CIC subsidiary would be joining the industry at a time when it is picking up after having undergone a huge value depreciation in assets held in 2011 as stock prices and the value of government securities declined.

Due to the volatility seen at the stock market, there are proposals to cut the level of exposure the pension funds can have in ordinary and preference shares and increase in government securities.

Research done by consultants hired by the World Bank suggests that the limit of funds to be invested in listed shares can be set between 20-40 per per cent of a fund’s total investments as compared to the present 70 per cent.

The proposals also suggest removal of the limit on the amount a retirement fund can invest in government securities, which is currently set at 30 per cent of the total assets.

Image courtesy: FreeDigitalPhotos.net

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