Kenya’s pension assets soar to record high, surpassing Sh2 trillion
Between 2021 and 2024, the total fund value grew by 41 per cent, and by 182.6 per cent over the past decade since 2014, when it stood at Sh789 billion.
Kenya’s pension sector recorded its strongest performance in a decade, with the total value of pension funds growing past the Sh2 trillion mark in 2024.
Latest figures by the Retirement Benefits Authority (RBA) show the fund value grew by 21.4 per cent in one year to hit Sh2.23 trillion as of December 2024, from Sh1.84 trillion in the same period the previous year.
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Between 2021 and 2024, the total fund value grew by 41 per cent, and by 182.6 per cent over the past decade since 2014, when it stood at Sh789 billion.
The Authority attributes the increase to a sharp 74 per cent jump in investment income, and a 29 per cent rise in member contributions.
“The sector continues to be dominated by defined contribution (DC) schemes, which have grown steadily from Sh1.29 trillion in 2021 to Sh1.95 trillion in 2024,” the report reads.
A defined contribution scheme refers to a retirement plan where both the employee and employer make regular contributions to an individual’s pension account.
Its final benefits at retirement depend on the total contributions made and the investment returns earned over time, rather than a pre-determined payout.
It is compared to the other two designs: the defined benefit (DB) and the hybrid scheme.
DB scheme, where retirees receive a guaranteed pension based on factors like salary and years of service, with the employer bearing the investment risk, held Sh261.2 billion in the year under review.
The hybrid scheme, on the other hand, held Sh15.9 billion.
It combines elements of both DB and DC models, offering a partially guaranteed benefit while also allowing for member contributions and market-based growth, sharing the risk between employer and employee.
Notably also under the membership type, the report reveals that occupational schemes consistently hold the largest share, rising to Sh1.44 trillion in 2024 from Sh1.22 trillion in 2023, and accounting for nearly 65 per cent of the total fund value.
Occupational schemes are retirement savings plans set up by employers for their employees. Membership is typically linked to one’s employment, meaning employees are automatically enrolled or eligible to join as part of their job benefits.
Statutory Scheme (NSSF) also saw notable growth, particularly in 2024, increasing from Sh312.9 billion in 2023 to Sh402.2 billion.
The umbrella and individual schemes also demonstrated steady expansion, reflecting growing diversification and participation in the retirement benefits sector.
Although income drawdown remains the smallest category, it experienced the highest relative growth of about 80 per cent since 2021, indicating increasing uptake of post-retirement income options.
On the other hand, pension schemes remained the dominant benefit type, contributing over 71 per cent of the total fund value in 2024.
Conversely, provident funds, while fluctuating over the period, showed recovery in 2024, rising to Sh635.1 billion from a dip in 2023.
Pension schemes and provident funds differ in how benefits are paid out at retirement.
In a pension scheme, members receive regular income after retirement, either for life or a specified period, often with part of the benefit taken as a lump sum and the rest paid periodically.
In contrast, a provident fund pays out the entire retirement benefit as a lump sum, giving members full access to their accumulated savings at once.
Investment assets
The largest allocation of the fund’s assets during the year, 48.5 per cent, was directed to Kenya Government Securities, reflecting a strong preference for low-risk, stable returns.
Guaranteed Funds followed with 20.8 per cent, while Immovable Property and Quoted Equity accounted for 10.7 and 8.5 per cent, respectively.
The remaining asset classes, including Fixed Deposits, Offshore Investments, and Alternative Assets like Private Equity, each held smaller shares, indicating a diversified but conservative investment approach.
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