NAIROBI, June 14 (Xinhua) -- Kenya's pension industry is expected to hit 10 billion U.S. dollars under management by the end of 2017, the industry regulator said on Wednesday.
Retirement Benefits Authority (RBA) Acting CEO Nzomo Mutuku told a media briefing the funds held by the pension industry as of December 2016 stood at 9.2 billion dollars.
"The pension industry is expected to reach 10 billion dollars by the end of the year due to increased contributions as well as capital gains," Mutuku said during the launch of Fanisi Capital Fund II.
Mutuku said Kenya's pension sector is largely untapped despite having one of the most developed pensions industry in Africa.
According to RBA, Kenya's gross domestic savings rate stands at 15 percent of GDP against a target of 25 percent.
"We have a low savings rate for retirement due to cultural factors such as the belief that children will take care of elderly parents," Mutuku said.
Government data indicates that 38 percent of all pension funds are invested in government securities, while real estate and equity markets account for 20 and 17 percent respectively.
The rest of the funds are in insurance, corporate bonds, bank deposits and offshore.
The National Treasury has spearheaded a number of regulatory reforms to expand the pension industry including a new law that allows up to 10 percent of pensions funds to be invested in private equity and venture capital funds. Enditem
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