The Kenyan pension industry has posted its best performance in years, with total assets hitting a record Ksh1.3 trillion and returns beating inflation by 26%.
According to the latest Zamara Consulting Actuaries Schemes Survey (Z-CASS), which tracks 407 retirement schemes, the median return for the year to June 2025 was 30%.
This marks a turnaround from recent years when pension funds struggled to keep up with inflation.
In 2022, schemes returned just 0.8% against inflation of 7.9%. In 2023, returns improved slightly to 6.6% but were still below the 7.9% inflation rate.
However, the new performance, against inflation of 3.8%, has given pension members a rare boost in real purchasing power.
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Reason for the Kenyan Pension Performance
According to the report, local market performance was a major driver.
Nairobi-listed shares surged 50.7%, while government bonds delivered gains of 27.8%. The combination of strong equity and fixed income performance pushed overall portfolio returns sharply higher.
“This year’s performance is a reminder that long-term thinking and diversification deliver real value to members,” said Sundeep Raichura, Group CEO, Zamara.
Although moderate and aggressive strategies enjoyed healthy gains within the year, conservative funds, defined as those with more than 80% of assets in government bonds, have quietly been the top long-term performers.
Over the past five years, these funds delivered an average annual return of 13.1%, equivalent to around 85% cumulative growth.
The stability of government securities has played a big role in this steady outperformance.
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Offshore Investments Outperform
According to the report, global diversification also proved its worth.
Offshore investments delivered the highest returns over the three-year (22.2%) and five-year (13.9%) periods.
These figures beat most local asset classes and even some global benchmarks.
However, only 190 of the surveyed schemes had any offshore exposure, with an average allocation of just 2%.
On the other hand, despite the performance, the report warns that not all of the 30% gain will be passed on directly to members.
Under current rules, unrealised gains which are based on asset revaluations rather than actual sales, are excluded from distributable income.
For defined contribution schemes, this means payouts will depend on how much of their gains have been realized.
The Z-CASS findings also underline the importance of maintaining diversified portfolios and paying attention to long-term performance rather than chasing short-term gains.
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