Pension Funds

Kenya's Pension Fund Industry amounts to approximately KShs 200 billion reference, or the equivalent of 23% of Gross Domestic Product (GDP). These funds are currently operated by statutory contributions under National Social Security Fund (“NSSF”), sponsor-led schemes and individual Retirement Benefit Schemes reference. | These pension funds are established by employers to facilitate and organize the investment of employees' retirement funds contributed by both the employers and the employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement. |
Most pension funds are commonly run by some sort of financial and investment institutions for the company and its employees. These institutions allocate portfolio managers to these funds. These managers are responsible for the management of the fund and have to invest the mandated requirements received from the client and adhere to the other guidelines and controls set by the institutions’ investment decision-making process.
The portfolio managers invest these funds in financial assets such as equities, bonds and other fixed-income securities. A high percentage of assets invested in equities results in significant exposure of pension wealth to fluctuations in stock market prices reference so that when there is a bullish market then the pension fund increases and when the market is a bear market the profits fall.
The companies seek the help of these financial and investment institutions in the hope that their fund managers will outperform the market. This is because they believe that the managers have the expertise, experience and are abreast with the latest changes in the financial market that will play a pivotal role in deciding their best investment plan therefore designing customized investment solutions for the clients.
Despite pension fund managers being largely