Kenya’s retirement benefits sector is now one of the largest single pools of long-term domestic capital in the country, and it is growing faster than the economy around it.

Industry assets under management reached approximately KES 3.16 trillion as at June 2026, up 12.7% from KES 2.81 trillion in December 2025, which was itself up 24.6% on December 2024. The sector has compounded at an average of roughly 17% a year over the past decade. On the Retirement Benefits Authority’s own figures, the industry now represents somewhere in the region of 15% of GDP, and roughly 26.5% of Kenya’s working-age population is enrolled in a retirement scheme, a coverage figure the Authority has publicly targeted raising to 34% by 2029.

The industry is structured around three tiers. The National Social Security Fund is the mandatory statutory scheme. Occupational schemes are established by employers, either as standalone trusts or through umbrella arrangements. Individual and umbrella retirement benefits schemes allow individuals, including the self-employed, to save outside an employer relationship. RBA reporting for the year to December 2025 recorded upward of 1,000 registered retirement benefits schemes, alongside a network of licensed fund managers, custodians, and administrators that service them. Every one of these schemes invests through the same statutory framework and the same set of asset allocation limits, which is why a fund manager or an issuer only needs to understand one rulebook, not a thousand different mandates.

What matters for a fund manager or an issuer is not the headline number but where the money currently sits. Four asset classes, government securities, guaranteed funds, quoted equities, and immovable property, accounted for roughly 88% of total industry assets as at June 2026, down from about 90% six months earlier. The remaining share, spread across offshore investments, private equity, corporate bonds, commercial paper, and unquoted equities, is the fastest-growing part of the portfolio and the part most fund managers and investees are actually competing for.

Every shilling of scheme money in Kenya moves inside a single statute and the regulations made under it, and the whole system exists to answer one question: can this scheme’s trustees prove the fund was invested the way the law requires.

The Retirement Benefits Act. The Retirement Benefits Act, Cap. 197 (No. 3 of 1997), establishes the Retirement Benefits Authority and gives it supervisory power over every registered scheme, manager, and custodian in the country. Section 37(2) allows the Cabinet Secretary, in consultation with the Authority, to make regulations governing how a scheme’s investment policy is implemented. Section 38(1) is the operative restriction: no scheme fund may be used to make a direct or indirect loan to any person, or invested contrary to any guidelines prescribed for that purpose. Section 38(2) gives the Authority power to disqualify anyone who contravenes those guidelines from further involvement in managing a scheme.

The investment guidelines. The specific percentage limits by asset class, the single most consulted numbers in this entire framework, are currently consolidated in Table G, made under regulation 18 of the Retirement Benefits (Forms and Fees) Regulations, issued under section 38 of the Act. A related rule, regulation 18A, caps a scheme’s exposure to a single issuer or a single asset at 15% of fund assets, with an exception for government securities. Trustees are required to adopt a written Investment Policy Statement that sits inside these ceilings, and it is the Investment Policy Statement, not the statutory maximum, that in practice governs what a given scheme’s appointed manager can actually buy.

Tax treatment. The Tax Laws (Amendment) Act 2024, effective 27 December 2024, raised the tax-deductible pension contribution limit from KES 20,000 to KES 30,000 a month (KES 240,000 to KES 360,000 a year), and introduced a separate deduction of up to KES 15,000 a month for contributions to a post-retirement medical fund. Retirement benefits are exempt from tax where the member has reached the scheme’s normal retirement age, withdraws on ill health, or has been a member for 20 years or more. Scheme registration now runs through RBA alone rather than requiring separate registration with the Kenya Revenue Authority.

This is the table that decides everything else in this guide. Every fund manager pitch, every private placement to a scheme, and every trustee investment decision has to fit inside these ceilings.

The limits below are expressed as a maximum percentage of a scheme’s total fund assets that may be held in that category. They apply to Kenyan occupational and individual retirement benefits schemes generally; a scheme’s own Investment Policy Statement may set narrower limits than these, but never wider ones.

Two structural rules sit underneath this table. First, a scheme cannot place more than 15% of its total fund assets in a single issuer or a single asset, government securities excepted, so even a category with a generous headline ceiling, such as the 70% equities limit, is in practice constrained issuer by issuer. Second, the categories are not mutually exclusive maximums that can all be used simultaneously; they cap what a scheme may hold in that class, not what it must hold, and the totals across all classes still cannot exceed 100% of fund assets.

Actual industry positioning sits well inside most of these ceilings. As at June 2026, offshore investments made up only about 3.3% of total industry AUM against the 15% cap, and private equity a low single-digit share against its 10% cap, meaning the regulatory headroom in the categories most relevant to fund managers and issuers seeking capital, offshore, private equity, infrastructure debt, and unlisted equity, is currently far larger than actual scheme exposure. That gap is the opportunity this guide is written for.

A fund manager needs two separate approvals before it can lawfully manage a Kenyan retirement benefits scheme’s money: a CMA licence to act as a fund manager at all, and RBA registration to act for a scheme specifically.

CMA licensing. Fund managers are licensed by the Capital Markets Authority under the Capital Markets Act, Cap. 485A, and the Capital Markets (Licensing Requirements) (General) Regulations. Following the 2025 overhaul of that licensing regime, the minimum paid-up share capital for a licensed fund manager rose from KES 10 million to KES 20 million, the separate liquid capital requirement was removed, and the flat KES 100,000 annual licence fee was replaced with a fee calculated on assets under management, 0.05% of AUM for collective investment schemes (subject to a minimum of KES 100,000 and a cap of KES 15 million) and 0.01% for non-collective mandates (capped at KES 15 million). Existing licensees have a transitional period, running to 11 December 2026, to come into compliance with the new requirements.

RBA registration. Separately, a manager (and a custodian) must be registered with RBA under the Retirement Benefits (Managers and Custodians) Regulations before it can handle scheme assets at all. A manager needs a minimum paid-up share capital of KES 10 million or such other sum as the Authority prescribes; a custodian needs KES 250 million. Both must apply on the prescribed form, and RBA has ninety days from receipt of a complete application to accept or reject it. A manager’s top management and board must include people with academic or professional qualifications in banking, insurance, law, accounting, actuarial science, finance, economics, or investment management. Usefully, the regulations allow a manager already licensed by CMA (or a custodian already authorised as a depository) to have that licence treated as equivalent RBA registration, but only where CMA and RBA have an agreement in place recognising that equivalence.

A separate route exists for managers of pooled alternative vehicles. The Capital Markets (Alternative Investment Funds) Regulations, 2023, effective 15 December 2023, created a distinct CMA licensing category for private equity, venture capital, and hedge fund vehicles that privately pool capital from between two and one hundred investors. An alternative investment fund manager must obtain CMA approval before pooling investor money, appoint a CMA-licensed custodian, and file a private placement memorandum for CMA approval; the minimum initial investment per investor is KES 1 million. This is the route most private equity and venture capital vehicles seeking pension scheme capital will need to sit inside, in addition to whatever RBA registration lets the scheme’s own manager allocate into the fund.

Private equity, infrastructure, and real estate are the categories with the most regulatory headroom relative to actual usage, and also the categories where the route to scheme capital is the least direct.

Private equity and venture capital. Capped at 10% of scheme assets under Table G. A scheme cannot simply write a cheque to a private company; in practice it invests through a manager mandated to deploy into private equity, typically into a vehicle licensed under the Capital Markets (Alternative Investment Funds) Regulations, 2023, described in Chapter IV. As at June 2026, private equity holdings across the industry stood at roughly KES 43 billion, a small fraction of the 10% ceiling, which is one reason PE and VC fund managers increasingly pitch pension money as an underused pool of domestic capital rather than a saturated one.

Infrastructure. Infrastructure and affordable housing debt instruments have their own 10% category, distinct from equity private equity exposure and from the broader government and infrastructure bond allocation that sits inside the 90% government securities ceiling. An infrastructure project seeking scheme debt capital, as opposed to government-guaranteed infrastructure bond exposure, needs to be structured as a qualifying debt instrument a scheme’s manager can hold within this specific bucket.

Real estate. Direct immovable property is capped at 30% of fund assets, and real estate investment trusts, listed or unlisted, sit in their own separate 30% category. A developer seeking pension capital for a real estate project has, broadly, two routes in: a direct property transaction that a scheme’s trustees approve and hold as immovable property, or a REIT structure that lets multiple schemes gain exposure without each one holding the underlying asset directly. The REIT route is generally the more scalable one for a developer courting several schemes rather than negotiating a single large direct purchase.

Offshore investment. Capped at 15% of fund assets. Actual industry offshore exposure was approximately 3.3% of total AUM as at June 2026, concentrated in global index and developed-market funds, which means the great majority of the regulatory allowance for offshore diversification is currently unused. Schemes are citing currency risk mitigation, inflation hedging, and comparatively lower domestic fixed-income yields as their stated reasons for increasing offshore allocation.

Investment limits control what a scheme can buy. Governance rules control who decides, and the Retirement Benefits (Good Governance Practices) Guidelines set out in detail what a properly run trustee board is expected to look like.

Board composition. A trustee board is expected to hold a broad mix of skills and competencies, including at least one member who is financially qualified. Tenures should be staggered so that no more than one-third of trustees retire at the same time, the board should have regard to gender balance, and the scheme should maintain a succession plan for its trustees. An individual trustee is not expected to sit on more than three scheme boards at once, or two if chairing any of them.

Code of conduct and conflicts. Every trustee is expected to sign the scheme’s code of conduct, committing to place members’ interests first, act honestly, avoid using inside information, exercise reasonable care and skill, and protect scheme assets. Schemes are expected to maintain a written conflict of interest policy with escalation procedures and gift limits, and to keep a conflicts register that trustees update at every board meeting and declare against on appointment.

Risk management and disclosure. The board is expected to adopt a written risk management policy covering identification, assessment, mitigation, monitoring, and reporting, supported by a risk register. Governance adherence is reported through the scheme’s audited financial statements, its annual general meeting, and its submissions to RBA, and member communication is expected to be accurate, clear, relevant, and timely.

Trustee training. RBA requires every trustee to be trained in the knowledge needed to carry out the role, and its own published guidance states that trustees should complete that training within six months of being elected or nominated to the board. For a corporate sponsor appointing trustees, or a corporate trustee provider (a regime the Retirement Benefits (Corporate Trustees) Regulations, 2023, formally introduced), this six-month window is worth building into onboarding rather than treating as a background compliance item.

Section 40 of the Act is short, but it is the provision that a trustee’s personal exposure ultimately traces back to.

Section 40 requires trustees to ensure the scheme fund is at all times managed in accordance with the Act, to take reasonable care that the scheme is managed in the best interests of members and sponsors, and to report unusual occurrences and overdue contributions to the Authority promptly. This is the statutory fiduciary standard against which a trustee’s conduct is measured, and it sits above and independent of whatever an individual scheme’s own trust deed or Investment Policy Statement says.

The Act backs this with specific penalties rather than leaving breach to general trust-law remedies alone. Investing scheme funds contrary to the prescribed guidelines, the section 38(1) restriction discussed in Chapter II, exposes the person responsible to disqualification from further involvement in managing any scheme under section 38(2). Section 39(2) makes “unsafe practices” an offence carrying a fine of up to KES 500,000 or imprisonment of up to two years. Failure to submit audited scheme accounts under section 34 carries the same fine and imprisonment range, plus a continuing daily fine of KES 5,000 for as long as the failure continues.

For a corporate sponsor, this has a direct governance consequence: the people it nominates to a trustee board are taking on personal statutory duties and personal exposure to these penalties, not simply performing an administrative role on the company’s behalf. Training, insurance where available, and a clear delegation of investment decisions to a properly appointed, currently licensed fund manager are the practical ways trustees manage that exposure without abdicating the section 40 duty itself, which cannot be delegated away entirely.

A business seeking pension capital, whether as a bond issuer, a private equity portfolio company, a real estate developer, or an infrastructure sponsor, is not selling to the scheme directly. It is selling to a manager operating inside a fixed set of percentage ceilings, and the pitch needs to be built around that fact.

Know which bucket you fall into, and its headroom. A single-issuer bond placement competes for room inside the 20% listed corporate bond limit or the 10% commercial paper and non-listed bond limit, and separately against the 15% single-issuer cap discussed in Chapter III. A private equity raise competes for room inside a 10% ceiling that, as at June 2026, was only lightly used industry-wide. Knowing which category an instrument falls into, and how much headroom schemes collectively have left in it, is the first question any issuer’s advisers should answer before approaching managers.

Route through a licensed, registered manager or a qualifying vehicle. Because schemes generally cannot invest directly, an issuer needs either an existing relationship with a CMA-licensed, RBA-registered fund manager already mandated by scheme clients, or, for a pooled private equity or venture capital raise, a vehicle structured under the Capital Markets (Alternative Investment Funds) Regulations, 2023, with its own CMA-licensed manager and custodian in place. Approaching a scheme’s trustees directly, without a properly appointed manager in the chain, is not how capital actually moves in this system.

Diversify the investor base for anything sizeable. The 15% single-issuer cap under regulation 18A means no single scheme’s capital, however large its assets, can be the whole answer for a sizeable raise; the strategy needs to contemplate several scheme mandates, or a pooled vehicle that itself diversifies exposure across issuers, rather than a bilateral placement with one scheme.

Structure real estate through a REIT where the goal is more than one scheme. As discussed in Chapter V, a REIT structure lets multiple schemes gain exposure inside their own separate REIT allocation without each one directly holding and managing the underlying property, which is generally a faster route to scale than a series of individually negotiated direct property transactions.

Build the compliance file the manager’s own trustees will need to see. Because a trustee’s section 40 exposure runs with the investment decision, a manager considering an allocation will want documentation, audited financials, legal opinions, title or security documentation, that lets its own trustees satisfy themselves the investment fits the scheme’s Investment Policy Statement and the statutory guidelines. Assembling this file before approaching a manager, rather than after an expression of interest, materially shortens the process.

A working, at-a-glance version of the governance and investment obligations covered in Chapters III, VI, and VII, for a scheme sponsor or a newly appointed trustee to confirm before signing off on the next investment decision.

Kenya’s pensions industry has grown past KES 3 trillion while staying heavily concentrated in government securities, guaranteed funds, quoted equities, and property. The regulatory room to diversify further into offshore assets, private equity, infrastructure, and real estate already exists; what is missing in most cases is not permission, it is a properly structured route into that money.

For a fund manager, that route runs through holding both a current CMA licence and current RBA registration, and, for alternative asset mandates, structuring the vehicle correctly from the outset under the 2023 Alternative Investment Funds Regulations. For a trustee, it runs through a defensible Investment Policy Statement, a properly governed board, and a documented, prompt response to anything that looks irregular. For a business or sponsor seeking scheme capital, it runs through understanding which Table G bucket an instrument sits in, how much headroom is actually left in it, and which licensed manager or qualifying vehicle stands between the business and the scheme’s money.

How Clay & Associates Advocates can help. We advise fund managers on CMA licensing and RBA registration, advise scheme sponsors and trustee boards on governance and Investment Policy Statement compliance, and advise businesses structuring private equity, infrastructure, and real estate vehicles intended to access pension capital. Every legal point in this guide traces to a named Act, regulation, or regulator’s own published data, the same standard applied across our published legal content.