Kenya’s pension assets hit KSh 2.25 trillion in 2024, according to new data from the Retirement Benefits Authority (RBA), marking a fourfold increase from KSh 548.7 billion in 2012. This remarkable growth reflects an 11.6% average annual expansion over 12 years, driven by rising contributions, investment diversification, and improved macroeconomic conditions.
Strong 2024 Performance and Market Recovery
From June to December 2024, pension assets expanded by KSh 276.5 billion, a 14% half-year growth attributed to enhanced contributions, especially from the National Social Security Fund (NSSF) following increased statutory limits. A bullish run on the Nairobi Securities Exchange (NSE) also boosted asset values, with the NSE 20 Index rising 21% during the same period.
Asset Allocation Trends and Shifts
Despite the industry’s growing appetite for alternative investments, the majority of assets remain concentrated in traditional instruments:
| Asset Class | 2012 Share | 2024 Share | Direction |
|---|---|---|---|
| Government Securities | 35% | 52.5% | ↑ |
| Quoted Equities | 24% | 9% | ↓ |
| Guaranteed Funds | 9% | 19.4% | ↑ |
| Offshore & Private Equity | <2% | ~3.6% | ↑ |
Government bonds alone now account for more than half of all pension fund investments, while guaranteed funds and offshore allocations are rising steadily as schemes diversify in search of higher returns.
Macro Tailwinds Driving Growth
The second half of 2024 was marked by macroeconomic improvements that supported portfolio performance:
| Indicator | Mid-Year | Year-End | Movement |
|---|---|---|---|
| Inflation (avg) | 5.6% | 3.5% | ↓ |
| CBK Rate | 13.0% | 11.25% | ↓ |
| NSE 20 Index | 1,656 | 2,010 | +21% |
| USD/KES | ~137.3 | ~129.3 | Stable |
These trends contributed to positive revaluations across most asset classes, enhancing the overall performance of pension portfolios.
Room for Growth and Diversification
Even with the increased exposure to government securities, allocations remain within regulatory limits, allowing room for greater diversification into alternative assets like private equity and offshore markets. This flexibility enables funds to mitigate risk and pursue higher returns.
A Maturing Industry
Kenya’s pension sector is maturing, with significant shifts in structure, strategy, and risk appetite. As assets continue to grow, the focus is now on efficient allocation, regulatory compliance, and long-term sustainability, setting the stage for AUM to cross KSh 3 trillion by 2027, according to projections.
