DETERMINANTS INFLUENCING PENSION FUND INVESTMENT PERFORMANCE IN KENYA

Anthony Kyanesa Mutula,Dr Assumptah Kagiri

doi:10.47941/ijf.227

Abstract

Purpose: The purpose of the study was to investigate the determinants influencing pension fund investment performance in Kenya.Methodology: The study employed a descriptive research design. The study target population was all the 33 registered pension funds in Kenya, and the sample size was 66 senior employees involved in decision making. The study adopted a census approach and therefore data was collected from all the 33 registered pension funds. A questionnaire was used to collect primary data from the selected respondents. The data collected was analyzed using the statistical package for social sciences (SPSS) version 23.0. The software was used to produce frequencies, descriptive and inferential statistics which was used to derive generalizations and conclusions regarding the population. Multiple linear regression model was used to measure the relationship between the independent variables and the dependent variable. The study findings were presented using figures and tables.Results: The study findings revealed a positive and significant relationship between diversification decisions, management competency, investment strategies, regulation compliance and investment performance of pension funds in Kenya.Unique contribution to theory, practice and policy: The study recommended that the management of pension funds should establish a strong organization structure and policy implementation, which will enhance their portfolio composition; the firms should have highly competent management; should incorporate investment literacy and capability programs in their organizations; and should continue adhering to the set regulations.

Highlights

1.1 Background of the StudyIn the recent past, many countries around the globe have experienced rapid establishment and growth of pension funds
The study findings revealed that there exist a positive relationship between management competence and SACCO performance
The gender composition reveals that the pension funds have met the minimum requirement of constitution (2010) which requires that no one gender should take up more than two thirds of employment positions in the workplace

Summary

Introduction

Many countries around the globe have experienced rapid establishment and growth of pension funds. The growth of these institutions is one development that countries have given considerable attention because of the sensitivity of the transactions involved in pension funds. Pension funds act as an important stimulus to capital markets in most countries where they exist through financial intermediation. Pension funds tend to complement, and stimulate development of capital markets, while acting as substitutes for banks. Growth of pension funds is the consequence of a number of non-financial and demand-side features, (Davis, 2010). Pension funds are important contributors to the gross domestic product (GDP) of countries. Retirement income accounts for 68% of the total income of retirees in Kenya, 45% in Australia, 45% in Austria and 80% in France while in South Africa 75% of the elderly population rely on pension income, (Alliance Global Investor, 2007)

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