Browse
Recent Submissions
Now showing 1 - 5 of 26
- ItemThe viability of private pension, defined contribution scheme, in Kenya.(Strathmore University, 2014) Mue, Mathew MusakiPension refers to the benefits one receives after attaining retirement age. There has been a significant increase in the needs for such benefits as the number of citizens in the country reaching retirement age has increased. Regardless of the fact, the state has been overwhelmed in the provision of such benefits. It has put in place policies to encourage private provision. There are three main pension schemes: Defined Benefit, Defined Contribution and a Hybrid Scheme. There has been a significant shift from the DB pension scheme to the DC pension scheme. This shift has been as a result of the wider changes in the pension landscape such as change in the legal and regulatory framework within countries and introduction of mandatory funded level just to mention a few reasons. The important question to ask is how suitable are these pension products being offered by private pension providers in particular, insurance companies. This study addressed two issues. First, it attempts to check whether the interest rate used by insurance companies in the calculation of interest earned considered the needs of the pension scheme members and if so protected them against investment risk. Secondly, from the rate acquired, the study determined the benefit amount attributable to the scheme members and showed how it is achieved. The results show that the interest rates used in attaining the earned interest amounts for the scheme members were sensitive to interest rate news. However, it was achieved that the interest rate news was not determined by the company's characteristics nor was it influenced by the needs of the scheme members. In conclusion, the study presented a good opportunity for research on what factors caused the sensitivity of the rate of return used to calculate the interest amounts to interest rate news. It also provided an understanding of the valuation of the pension benefit amounts for scheme members of a defined contributions pension scheme.
- ItemA comparison of performance of unit trusts and the stock market in Kenya(Strathmore University, 2014) Kahura, KennedyThis paper seeks to make a comparison between the performance of equity unit trusts and the stock market. It answers two questions; whether equity funds are better performers than the market and whether the results obtained over the period of study are consistent with past conclusions of other researchers. Risk adjusted measures of return including Jensen's alpha, Sharpe Index and Treynor Measure are used in calculating the returns to be compared. Evidence from the results indicates that equity funds perform below the stock market unlike in a previous study by Kagunga that concludes unit trusts outperform the market. Raw returns analysis shows inferior returns across the equity funds industry compared to the returns from the market. Evaluating the same based on market adjusted returns simply emphasizes the fact that fund managers have not delivered superior returns relative to the market. In fact, there is only one out of ten funds that outperforms the market. It could therefore be concluded that equity fund managers should just manage indexed portfolios since they have not been able to beat the index. Further investigation could be done to see if the outcome is the same on including dividend yields before comparison is done. Our results question the value of engaging in rigorous investment strategies as opposed to passive; simply saving in high interest accounts or government papers for short term investment as well as long term since I year bond earns around 11% per annum with minimal deviation and 10 year bonds earn around 14%.
- ItemImpacts of pension reforms on the Kenyan pension industry(Strathmore University, 2015) Masinde, Mercy VictoriaThe emergence of full-fledged reforms in Kenya from the introduction of the Retirement Benefits Authority in1997 has rekindled hopes among the ageing population in Kenya. These reforms are geared towards creating good social welfare conditions for Kenyans. The Kenyan Pension industry remains a significant growth area which needs structural changes in management and governance in order to meet the ever changing scheme member needs. This is what forms the basis of the NSSF Act 2013. In this study the effect of the NSSF Act contribution rate has been examined through use a Contribution rate model. Additionally, Kenyans' perception towards the yet to be implemented NSSF Act has been observed by use of questionnaire analysis. These reforms are directly linked to the general economic growth of the country. The study asserts that the set 6% contribution is sufficient to meet the welfare conditions of Kenyans. This has been supported by majority of the stakeholders (scheme members, administrators and fund managers among others) however; good implementation strategies need to be put in place in order for the public to realize the good effects of the same.This study therefore seeks to identify the main social welfare reforms put in place, as well as find out the effects and challenges towards implementation of these reforms on the performance of the industry with a critical theoretical look at the NSSF Act 2013.
- ItemQuantifying idiosyncratic risk in defined benefit pension schemes in Kenya(Strathmore University, 2014) Mburu, Edna NjeriPension schemes are prone to numerous risks that could affect the funds resulting in payments different from those that were guaranteed on entrance into the scheme. This study sought to measure the idiosyncratic risk in a sample of defined benefit schemes in Kenya, based on a model by Catherine Donnelly, a fellow of the Institute and Faculty of Actuaries. The study was conducted in Nairobi between August 2013 and February 2014. Data was collected from five civil service defined benefit schemes still in operation. The idiosyncratic risk was quantified using the coefficient of variation of each scheme's liability with respect to its expected value. Each scheme presented different levels of the risk based on factors such as the number of scheme members, their ages, salaries and expected pension benefit. The results suggested that the levels of idiosyncratic risk could be reduced by increasing the number of scheme members and that different job classes within the scheme further affected the risk level of the scheme.
- ItemLong term implications of early access to pension benefits - the case of Kenya(Strathmore University, 2014) Rotich, Ivy Chepng'etichIn July 2009, a bill was introduced that allowed members of a pension scheme to access their contributions and 50% of their employer's contribution. This change in law resulted to increased early access of pension funds upon change of jobs by individuals in pension schemes. This study sought to determine the implications of early access of funds by members and the long-term implications it has. Data was collected on a sample of 336 individuals and analysis done on how factors such as age, job change frequency, withdrawal option, withdrawal amounts and financial education of the members affected their retirement income adequacy. The results obtained concluded that increased job frequency and the option to withdraw significantly resulted to reduced retirement income adequacy while increased financial education improves pension adequacy as an individual is able to make more informed decisions.