Pension fund investment in infrastructure

Overview

The pension industry serves as a critical pillar of financial security, providing essential long-term retirement benefits while managing substantial financial assets. In Kenya, where the pension sector has grown to approximately KES 1.5 trillion in assets under management as of 2024, investment decisions regarding pension funds represent one of the most significant responsibilities entrusted to scheme trustees. Kenya's pension industry, regulated by the Retirement Benefits Authority (RBA), has seen significant reforms through the Retirement Benefits Act and subsequent regulations that have expanded investment options beyond traditional assets. 

With the sector growing at an annual rate of 10-12% and covering over 20% of Kenya's formal workforce, trustees face increasing pressure to deliver competitive returns while maintaining security of funds. In today's financial landscape, pension fund managers must navigate increasingly complex regulatory environments, balance diverse stakeholder interests, and adapt to rapidly changing market conditions. The RBA's investment guidelines currently allow Kenyan pension schemes to allocate up to 10% in private equity, 30% in real estate, and 10% in infrastructure investments - opportunities that remain significantly underutilized by many schemes. The ability to strategically diversify portfolios and access these alternative markets and asset classes has become essential for achieving optimal returns while managing risk appropriately.