1. 17 th November 06 UNCLAIMED PROPERTY ASSETS REGISTER (K) A Presentation on the Development of Retirement Benefits Industry in Kenya: Unclaimed Retirement Benefits & Deferred Compensation Prepared by; Mr. Joe K. Ngigi Chief Executive Unclaimed Property Assets Register (K) Limited Cirkon Court- George Padmore Road P. O Box 55229-00200, Nairobi. Tel: +254-20-2728405 GSM: +254-723-274883 E-mail: info@uparkenya.cominfo@uparkenya.com

2. INTRODUCTION LOST PENSIONS, LOST PENSIONERS: IS A NATIONAL REGISTER OF UNCLAIMED ASSETS THE ANSWER?

3. Robust Growth in the Kenyan Economy Government statistics and other market indicators of Kenya’s economy over the last three and a half years of a regime change shows growth in the value of assets in all sectors. The largest logical benefactor & investor in the capital markets sub-sector is the retirement benefits schemes, with about 30% invested as per the available statistics. This substantial growth in value is therefore expected to be realized in terms of what goes back in the form of returns, not only to the benefit schemes, but ultimately the pensioners, on whose behalf the schemes have invested these values.

4. Market Indicators at a glance shows: INDICATOR 31/12/03 31/12/0430/06/0531/12/0531/10/06 Mkt. Cap (KSh. bn) 317.89314.15420.32462.52809 Shares traded @ NSE (mn) 381625412.18741.200 Bond Mkt. (KSh. Bn) 41.9834.1148.7413.5944.72 Equity turnover (KSh. Bn) 15.2522.3212.5036.5275.53

5. Government Directive/Statute The recent Government directive, that their pensioners entitlement increases by 300% is an indication that policy-makers are beginning to appreciate the reality on the ground; The citizenry is poorer, yet the market trends are reflecting a growth in financial asset values that are not reflected in their retirement savings.

6. Other Indicators of Market Performance i.e Absorption Capacity of the NSE in 2004 INSTITUTIONAMOUNT (Ksh. bn) Insurance4.46+ Fund Managers2.24+ Co-operative Sector8.60+ Pension Funds20.00* Households19.49+ Kenyan Diaspora10.00 Non Bank Financial Institutions 2.12+ TOTAL66.85 * Includes capital growth, + 2003 estimates

7. Current Market Reality The process of locating, and tracing unclaimed assets (pension benefits being one of the major assets as indicated in the table above) is not provided for in Kenya. Secondly, NO tracing service exists to enable pensioners follow up their entitlements from their employer(s). This includes pension funds or schemes or firms that may have been sold, merged, wound up voluntarily, closed down due to business downturn or become bankrupt, or their direct entitlements if they were deployed on contract terms. The matter becomes compounded in cases where the employees have emigrated to other countries and settled there as professionals, or as citizens (the Kenyan Diaspora is a case in point). Thus, the need to establish a service that provides a route map to pensioners to trace, locate and claim their asset values.

8. Suggested Remedies to the Problem Information availability, in line with international best practice, enabling all unclaimed asset owners to access this information cost-effectively. UPAR (K) Limited has the component of not only availing this service to the public, but also assists other to trace and locate their assets. Creation of a Pensions Benefit Guarantee Scheme, that would provide not only information on unclaimed pension benefits, but also manage employee pension schemes of firms that have merged, sold, wound up or pronounced bankrupt by the judicial system.

9. Suggested Remedies Cont… Central Government insists that unclaimed assets be turned over to them, after a defined dormancy period, which would culminate in the following: – Increased revenue base for government capital expenditure – Re-united asset owners would pay taxes “locked” in unclaimed assets on transfer ( I.e estate duties) – Renewed asset activity would result in re-investment in the economy thus spurring growth in the economy. – Unclaimed Assets not falling within the defined dormancy period should be invested to ensure value addition, even in their “unclaimed state.”

10. Conclusion Rationale for an Unclaimed Assets National Register 1 (a) Creation of a national register, such as the UPAR, and in conjunction with the RBA and other stakeholders reporting on the status of unclaimed retirement benefits to the public. A case in point would be the republic of Ireland, on announcing that all unclaimed assets would revert to the State, achieved a 60% re- unification, meaning that that whereabouts of owners and beneficiaries is not insurmountable. (b) Create specific regulatory and legislative framework. The resultant effect would be to mitigate the plight and financial deficiencies of the owners and/or beneficiaries often widows and orphans. (c) Hedge the risk of litigation arising from claimants, I.e class action suits.