Defined contribution pension plans as a strategy for pension management in Kenya: a case study of Kenya Power & Lighting Company Ltd Staff Retirement Benefits Scheme
Pension plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. The mostly used pension schemes were the Defined Benefits scheme. These traditional Defined Benefits pension plans are now slowly losing their authority in the occupational pension systems of many countries; over the past few decades there has been a gradual shift towards Defined Contribution pensions and, in some countries, Defined Contribution plans now account for the majority of invested assets in private sector occupational pension plans. This study sought to find the impact and challenges of adopting the Defined Contribution scheme in KPLC Staff Retirement Benefits Scheme. The data was collected from key employees of KPLC, the Board of Trustees and the Secretariat of KPLC-RBS. The data collected was analysed using content analysis and the results presented in prose form. The adoption of the plan has had great impact to the company in that it is easy to administer, it is also cheaper and members leaving before retirement and it has resulted to better governance. However, the study found that the conversion of the Defined Benefits to Defined Contribution faced setbacks such as resistance from the members, financial pressure on the sponsors in paying the deficits, lacked economies of scale which made it expensive to access services of service providers at early stages and compliance challenges. The study concluded that Defined Contribution plan was a better strategy to managing pension Scheme in KPLC RBS. Since the study was conducted in a government Parastatal, it is recommended that a similar study be conducted in other companies both private and public in Kenya and regionally to provide more information. The study also recommends a study on other pension strategies that can be used to manage pension schemes in Kenya.