Governance in Kenya’s Occupational Retirement Benefit Schemes: The Service Providers’ Perspective

Abstract

Despite corporate governance attracting unprecedented attention in the 21^st Century, not much effort has been devoted to governance in the retirement benefits industry, yet pension assets constitute significant proportions of the global Gross Domestic Product (GDP). This study explores theinternal governance stipulations set for occupational retirement benefit schemes in Kenya and interrogates the extent to which the rules are implemented. The study further unearthsemerging gaps in the governance of occupational retirement benefit schemes that policy makers should proactivelydeal with. Focus group discussions are conducted with 42 key informants in the Kenyan retirement benefits industry namely; administrators, custodians, fund managers and actuaries. The results show that the governance of the retirement benefit schemes has improved over the years and led to significant growth in the assets of the schemes but there is need to continuously review the rules to match the dynamic financial and economic environment. Specifically, policy makers are advised to focus on large schemes that have co-fund managers, devise governance regulations for investment in alternative assets, review the governance structures of the service providers, devise a framework for accounting for pension fund reserves, seek more involvement of members in governance of the schemes and devise rules of governance for cross border schemes.