The government will convert an estimated Sh40billion worth of bonds to offset the debt owed to pension schemes in the country.
This is among the ongoing talks between the government and the schemes to sort out the debt and outstanding remittances
The debt is majorly from the former city councils and the devolved units on account of non-remittance of the dues and delayed release of funds by the National Treasury.
County Pension Fund chief executive Hosea Kili said that the National Treasury and Senate have taken up the mater to determined the exact amount owed.
“A taskforce to be formed by the Treasury will ensure that the debt accuracy is confirmed and then the solution of providing bond to pay off will be done,” said Kili
The talks come in the wake of a subdued performance for the bonds held by the pension schemes under CPF in the country.
Kili noted that that the high performance of current bonds sunk the performance and average returns of the old bonds held by the scheme.
“The performance for 2023 was what I would call subdued because of the economic environment last year,” added Kili.
CPF has also defended its investments on unquoted securities which had exceeded the threshold by Retirement Benefits Authority.
Kili pointed out that some of the investments in unquoted equities had appreciated over the period and was not a case of new investments. He said this will be sorted out by rebalancing.
Currently the four funds under CPF combined hold over Sh100 billion in assets and over 100,000 in membership.
In 2023 assets under the County Pension Fund dropped by Sh739 million on increased customer withdrawal despite increased membership base. This saw CPFs asset drop from Sh6.8 billion to Sh6.06 billion last year.
The financials show that investment in government securities, which constituted the largest share of our portfolio, proved to be particularly ‘resilient’.
“Additionally, our strategic investments in REITs and private equity funds also contributed positively to the overall asset growth,” said CPF in their annual report.
The schemes reported membership growth at the end of 2023, the County Pension Fund had 76,593 active members in the Conventional Fund, up from 68,280 in the previous year.
The Salih Fund (Sharia-compliant product) also saw a rise in membership to 9,131 from 9,086 in 2022.
The Post-Retirement Medical Fund (PRMF), introduced in 2022, experienced substantial growth, ending the year with 3,770 members, up from 108 in the previous year
“This growth in membership underscores our ongoing efforts in member education, recruitment drives, and stakeholder engagement initiatives,” said Kili.