The Asset Under Management (AUM) in the pension industry grew by 12.22% from the period dated December 2024 to June 2025, according to a report by the Retirement Benefits Authority. The growth was on account of increased contributions during the period under review, which was augmented by increased contributions from the NSSF. The assets however recorded a robust 28% year-on-year growth at the end of June 2025 relative to June 2024.
Government securities accounted for 52.53% of the pension investment allocation, followed by guaranteed funds with 19.60%, quoted equities with 10.08% and closely followed by immovable property with an allocation of 9.31%. The absolute amount of pension fund assets held in listed corporate bonds declined to KES 3.8 billion as at the end of June 2025 from KES 7.04 billion in June 2024. There was a notable growth in investment assets held in offshore instruments, which stood at KES 84.0B (3.32%) as at the end of June 2025 as compared to KES 39.04 billion (1.97%) as at the end of June 2024.
Pension assets held in cash recorded a decline of 12.02% to KES 20.3B as of end June 2025 compared to KES 24.71B in June 2024, attributed to managers seeking opportunities with relatively higher returns. All investment asset categories were compliant with statutory limits.
Contributions grew by KES 314.4 billion in the period, and there was a 15% increase in the assets held by fund managers with a few fund managers getting licensed, notably Investment Partners Limited and VCG Asset Managers Limited. The funds held by approved issuers also increased during the period from KES 437.1 billion to KES 495.91 billion, recording a growth of 13%.
Liquidity Ratio of Pension Funds
The liquidity ratio, is a ratio which measures the pension funds’ capacity to meet their financial obligations from pension payments, and is calculated as liquid pension assets (liquid assets defined as currency, demand deposits, and market-traded securities) divided by total pension assets, stood 90.68%, showing high liquidity and a strong ability to meet short-term liabilities. The pension asset to GDP ratio, which measures the pension system’s size relative to the national economy and indicates its investment capacity, was recorded as 15.2%, which is significantly below the OECD average of 92.2%, but it still aligns with the average for non-OECD countries.
The industry is still expected to grow given the growth of NSSF due to the increase of contribution limits from KES 36,000 to KES 72,000 in the Tier 2 and KES 7,000 to KES 8,000 in the tier 1. NSSF recorded a KES 81.95 billion increase in their total net assets and is expected to increase further in the coming years as it is only in year three of the periodic increase in contributions.
“The retirement benefits assets are projected to continue growing in the second half of 2025, driven by enhanced member contributions. Investment income from fixed income assets, such as government securities and guaranteed funds, is expected to further fuel this growth, supported by stable interest rates.” – Retirement Benefits Authority.
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