The impact of regulation of the retirement benefits sector on the financial performance of occupational pension schemes in Kenya
Abstract
The Retirement Benefits Act was enacted in 1997 with the aim of regulating the
retirement benefits sector, which lacked a harmonized legal framework. The Retirement
Benefits Regulations, which were gazetted in the year 2000 put in place further and more
precise provisions aimed at achieving the core objectives of protecting the benefits of
members' of retirement benefit schemes and developing the retirement benefits industry.
Since the coming into effect of the Retirement Benefits Act and Regulations, the
management of pension schemes has become more structured and organized. However, it
is questionable whether this has translated into an improvement in the financial
performance of the schemes. This is because the regulations have also brought about
some limitations on the operations of pension schemes and an increase in administrative
costs. It is the financial performance that determines the financial health of a pension
scheme and its ability to pay all benefits as and when they fall due.
This study set out to investigate whether the enactment of regulations has had a
significant impact on the financial performance of pension schemes. A sample of thirty
occupational retirement benefit schemes was selected from data obtained from scheme
administrators. The total contributions and the fund values for each scheme in the sample
was analyzed for each of the five years prior to and the five years after the year 2000.
Using the matched or paired t-test, findings indicated that there was a significant positive
impact in the financial performance of the population of occupational retirement benefit
schemes in the period in which the regulations have been in place.
Sponsorhip
University of NairobiPublisher
School of Business, University of Nairobi