Pension schemes' investments in Nairobi Securities Exchange-listed shares rose by 54.6 percent to Sh312.84 billion in the year ended December 2025 from Sh202.3 billion a year earlier, benefiting from the stock market rally.
This helped lift the value of the quoted equities held by the funds, as a share of their total assets, to 11.13 percent from 8.97 percent, according to data from the Retirement Benefits Authority (RBA).
The regulator has attributed the higher value of equity holdings to a rise in price of held stocks as opposed to additional share purchases.
“The growth was largely due to price rallies in key blue-chip counters, most notably Safaricom, East African Breweries Plc and leading tier-one banks, including Equity Group, KCB Group and Co-operative Bank of Kenya,” RBA said in a sector statistics report.
“Pension funds remain significant institutional investors in the capital markets, with 11.13 percent of the total industry assets allocated to quoted equities.”
The NSE maintained a positive trajectory, with market capitalisation rising to Sh2.94 trillion in the review period from Sh1.93 trillion a year prior.
Most stock prices rose by a double-digit percentage as the Nairobi bourse profited from higher corporate earnings, dividends and favourable macroeconomic factors including a stable exchange rate and falling interest rates.
Safaricom’s share price rose by 66.2 percent to close at Sh28.35 on December 31, 2025 while KCB was up 58 percent to Sh65.75.
Pension fund investments in equities however remain modest despite the market boom with RBA allowing the retirement savings vehicles to invest up to 70 percent of their assets in listed companies.
The funds continue to favour investments in Treasury bills and bonds with government securities as a share of industry assets falling only marginally to 52.14 percent from 52.74 percent.
Pension funds can hold up to 90 percent of assets in government securities which are considered the lowest risk of all types of investments.
The funds recorded a rise in allocations to all asset classes except fixed deposits as the entities switched from the lower yielding bank accounts as interest rates fell.
“This reduction is attributed to easing of monetary policy and lowering of interest rates,” RBA added.
Listed corporate bonds recorded the highest increase in allocations across 2025 as the pension funds sunk Sh18.1 billion in the Linzi infrastructure asset-backed security which funded the development of the Talanta Sports Stadium.
Pension funds have smaller allocations to alternative asset classes including private equity, unlisted firms, real estate investment trusts and commercial paper.
Up to 90.4 percent of the pension fund assets sit in four primary asset classes, namely, government securities, quoted equities, immovable property and guaranteed funds.
The pension industry total assets under management hit Sh2.8 trillion from Sh2.25 trillion previously with the increase being largely pegged on higher contributions to the State-controlled National Social Security Fund (NSSF).
“The transition into the third year of the NSSF Act, 2013 implementation provided an increase in contributions with the lower and upper contribution limits rising to Sh8,000 and Sh72,000 respectively,” RBA said.
This means the lowest pension contribution by employees rose to Sh480 per month, before being matched by the employer, from Sh420 previously while the maximum contribution was set at Sh6,480 from Sh4,320.
