During a recent forum, the CEO of the Retirement Benefits Authority, Charles Machira, set out a clear direction for the pensions industry.
He highlighted priorities that will shape the next phase: innovation with safeguards, expanding coverage, using pension funds to support economic growth, and improving outcomes for members. At the centre of this shift are trustees.
These priorities come at a time when pension assets stand at nearly Sh2.81 trillion. But growth alone is not success when the coverage gap remains Kenya’s biggest challenge. Only about a quarter of Kenya’s workforce is covered by a pension scheme, leaving the majority without structured retirement savings, especially in the informal sector, which accounts for over 80 percent of employment.
This is where the next phase of the sector must focus: expanding access while improving outcomes. Kenya has already shown how innovation can expand access. Mobile money transformed financial inclusion. Today, micro-pension products and digital platforms are extending retirement savings to informal sector workers such as boda boda riders, traders, and small business owners.
But as we adopt innovation, it must be practical. Trustees must ensure these products are simple, affordable, and built for long-term savings. Without this, adoption will remain low.
As coverage expands, the question of returns becomes crucial. Today, pension portfolios remain heavily weighted toward traditional assets. Over 90 percent of funds are still invested in government securities, equities, guaranteed funds, and property. Government securities alone account for more than half of total assets.
While this has provided stability, it also limits growth. Encouragingly, there is a gradual shift. Allocations to private equity, corporate bonds, and other alternative assets are increasing, offering the potential for stronger long-term returns.
This is where trustees play a decisive role to strike the right balance between stability and growth. Too much conservatism erodes value over time, especially in an inflationary environment. Poorly assessed risk, on the other hand, can lead to losses.
The third priority is that as pension funds serve members, they must also serve the economy. Kenya faces an annual infrastructure financing gap exceeding Sh330 billion, pension funds have the assets. We are already seeing pension capital financing infrastructure, real estate, and businesses that create jobs. These investments are shaping Kenya’s development while generating returns for members.
But they must be approached carefully. Trustees must ensure that every allocation is justified, well-structured, and aligned to long-term obligations. The goal is not to follow trends, but to make decisions that improve outcomes for members.
Ultimately, the purpose of a pension system is to provide security in retirement. For many Kenyans, the biggest risks are rising healthcare costs and longer life expectancy. Savings that appear adequate can quickly diminish. Solutions such as post-retirement medical funds and more flexible savings structures are therefore critical, but only if they are well implemented.
Trustees must move beyond a compliance-driven approach and take full responsibility for member outcomes.
It is no longer sufficient to meet regulatory requirements; they must ensure that members are saving enough and that investments deliver consistent performance over time.
This calls for stronger capability, active oversight, and the confidence to challenge decisions to ensure products remain relevant and risks are effectively managed.
The next phase of the pension sector will be defined by whether trustees can expand access, invest more strategically, and focus on delivering meaningful retirement outcomes. Their actions will determine whether the sector fulfills its promise or leaves many Kenyans without adequate support in retirement.