Challenges Faced By Insurance Firms In The Management Of Pension Funds In Kenya
The Insurance industry manages pensions funds together with other administrators for the basic objective of retirement benefits for members. The management of these pension funds is regulated by the Retirement Benefits Authority (RBA) and the tax implications controlled by Kenya Revenue Authority (KRA). The establishment of the Retirement Benefits Act and subsequent formation of the Retirement Benefits Authority (The Authority) in Kenya in 1997 (Retirement Benefits Act, 1997) was aimed at addressing the challenges that plagued the industry at the time and in addition, to enable Kenya gain benefits of a functioning retirement benefit industry that is evident in more developed countries. It is since this time that the insurance industry has undergone numerous changes in compliance of the rules set by the RBA. This study therefore tries to establish some of the challenges posed in the insurance industry in the management of pension funds in regard to the Retirement Benefits Authority. The study applied descriptive data analysis to establish the challenges and analysis the causes of these impediments in management of pension funds. Data was collected form eleven insurance companies who perform pension funds administration and are registered with RBA therefore authorized/complied to transact this kind of business. Frequency distribution and percentages are used to record the number of times a score is observed and the extent of occurrence of the particular observation. The challenges were evaluated using factors analysis using principal component analysis by grouping together the key variables that operationarize those measures used to assess the challenges. The results have revealed that the overall sector faces numerous challenges in the pension management specifically arising from the frequent budget changes that affect the pensions sector. Moreover, the service providers also pose hurdles for the insurance industry especially the schemes’ trustees. These findings would provide policy planners with information to determine the measures possible to sustain and control these challenges. Policy makers need to formulate and implement strategies to guide the industry and other sectors allocate the optimal inputs for efficient and maximum benefits to Kenyans at their retirement age.
The following license files are associated with this item: