FINANCING STRUCTURE AND FINANCIAL PERFORMANCE OF INDIVIDUAL PENSION FUNDS IN KENYA
Abstract
The purpose of the study is to investigate the effect of financing structure on the financial performance of individual pension funds in Kenya. The study specifically investigated the effect of retained earnings, amount of contributions, accruals and share capital structure on the financial performance of pension funds in Kenya. The study employed cross-sectional survey research design. A census of 47 individual pension schemes was selected out of a total 1308 registered pension funds in Kenya. Data was collected from the annual financial statements of the pension funds filed with RBA. Secondary data was collected using secondary data collection sheet. The collected data was edited, coded for processing using the Statistical Package for Social Sciences (SPSS v.29) and results were presented in frequency tables. Descriptive and inferential statistics was used to analyze information generated from the respondents. The study findings revealed that retained earnings and performance of individual pension schemes are positively and significantly correlated. This implies that an increase in retained earnings is associated with an increase in financial performance of pension funds. The study findings revealed that amount of contributions and performances are positively and significantly correlated. This implies that an increase in amount of contributions is associated with an increase in financial performance of pension funds. The study findings revealed that share capital and performance are positively and significantly correlated. The study findings revealed that accruals and performance are positively and significantly correlated. The study concludes that there is positive and statistically significant relationship between retained earnings, accruals, members’ contribution and share capital on financial performance of individual pension schemes in Kenya. The study recommends that pension schemes should develop sustainable retention strategies to ensure financial stability. Policymakers may consider incentives for higher retained earnings, such as tax benefits or regulatory frameworks that encourage reinvestment of surpluses. Additionally, schemes should optimize their investment returns to support long-term fund sustainability.
Keywords: Share Capital Structure, Accruals Structure, Member Contributions Structure, Retained Earnings Structure
CITATION: Shehe, A. B. & Ibrahim, A. (2025) Financing structure and financial performance of individual pension funds in Kenya. The Strategic Journal of Business & Change Management, 12 (2), 32 – 42. http://dx.doi.org/10.61426/sjbcm.v12i1.3196
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3196
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