EFFECT OF TOTAL CONTRIBUTION ON FINANCIAL PERFORMANCE OF PENSION SCHEMES IN KENYA: A SURVEY OF PENSION SCHEMES IN KENYA

Abstract

Purpose: Financial performance of pension funds in Kenya is wanting and thus, raises doubts whether they can be able to ensure access to regular or lump sum income for retirees. The pension should provide an adequate replacement income for the remaining life of the member or partner and remove the risk that the member outlives the resources. Poor performance of pension schemes jeopardizes this role and hence the retired people will not be able to have high degree of retirement income security. Therefore, this study sought to analyze the effect of total contribution on financial performance of pension schemes in Kenya.

Methodology: The target population for this study was all the registered occupational pension schemes in Kenya which according to the Retirement Benefits Authority report are 818 by the end of the year 2016. Random sampling method was applied to come up with the sample size of 261 registered occupational retirement benefits schemes. The study used secondary data which was analyzed using inferential and descriptive statistics.

Results: The study findings established that total contribution has a positive and significant effect on financial performance of pension schemes.

Policy recommendation: The study recommends that Pension Schemes in Kenya should invest more in systems to recruit more members to increase the total contributions as it positively affects financial performance.