Pensions and Institutional Investment in Kenya: Rules, Limits and Routes to Capital
A working reference for fund managers, scheme trustees and businesses seeking pension capital. It sets out how Kenya’s retirement benefits schemes are regulated, how much of their assets can go into each investment class, and what it takes to be appointed to manage that money or to receive it.
Scale and structure
Kenya’s retirement benefits sector is one of the largest pools of long-term domestic capital in the country, and it is growing faster than the economy around it.
Assets grew 9.8% in the six months to June 2026, after growth of 24.6% in calendar 2025. On RBA’s December 2025 figures, pension assets were equal to about 16% of GDP.
Some press reports put June 2026 assets at KES 3.17 trillion. RBA has since listed an updated June 2026 industry report; the figures used in this guide (KES 3,085.82 billion) are internally consistent with the asset shares RBA reports. Check RBA’s latest report before quoting a total in a transaction document.
The industry has three broad layers. The National Social Security Fund is the mandatory statutory scheme. Occupational schemes are set up by employers, either as standalone trusts or through umbrella arrangements. Individual retirement benefits schemes let people, including the self-employed, save outside an employer relationship. All of them invest under the same statute and the same asset class limits, so a fund manager or an issuer needs to understand one rulebook, not hundreds of separate mandates.
For a fund manager or an issuer, the question is where the money sits. Four classes (government securities, guaranteed funds, quoted equities and immovable property) held about 88% of industry assets in June 2026, down from about 90% six months earlier. The rest, spread across offshore investments, private equity, commercial paper, corporate bonds, REITs and unquoted shares, is the fastest-growing part of the portfolio and the part most managers and investees compete for.
The regulatory framework
Every shilling of scheme money moves inside one statute and the regulations made under it. The system is built to answer one question: can the trustees show the fund was invested as the law requires?
Retirement Benefits Act, Cap. 197
Establishes RBA and its supervisory power over schemes, trustees, managers, custodians and administrators.
Occupational schemes regulations
Regulation 37 requires a written investment policy; regulation 38 applies the asset class limits.
Table G
The percentage ceilings, set out in Table G of the Retirement Benefits (Forms and Fees) Regulations.
The Act
Section 37 requires every scheme to have a prudent investment policy. A scheme with a fund value of KES 100 million or less may invest up to 100% of its funds in government securities. Section 38(1) is the operative restriction: scheme funds may not be used to make a direct or indirect loan to any person, may not be invested contrary to the prescribed guidelines, and may not be placed with an institution in return for preferential loans or other consideration for insiders. Under section 38(2), RBA may disqualify anyone who breaches section 38 from managing, holding in custody or administering any scheme fund.
The investment policy statement
Regulation 37 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations requires each scheme or pooled fund to prepare a written statement of the principles governing its investment decisions, submit it to RBA, and revise and resubmit it every three years. The statement is signed by the trustees and the investment adviser. Before preparing or revising it, the trustees must obtain and consider written advice from a registered Chartered Financial Analyst, an actuary, an investment adviser or a CMA-registered fund manager, who may not be the scheme’s own manager, a related party or a scheme employee. Where no statement is kept, RBA may bar a trustee from serving.
The limits
Regulation 38 allows a scheme to invest only in the asset classes listed in Form 1G (Table G), and only up to the percentage set for each class. Table G sits in the Retirement Benefits (Forms and Fees) Regulations under regulation 18, which gives effect to the guidelines prescribed under section 38(1)(b) of the Act. Regulation 18A of the same Regulations adds concentration limits (Chapter III). The scheme’s investment policy statement must sit inside these ceilings, and in practice it is the statement, not the statutory maximum, that governs what a manager can buy.
Because the limits sit in subsidiary legislation, they can be changed without amending the Act. The figures in this guide are from the revised edition of the Forms and Fees Regulations on Kenya Law (last amended by Legal Notice 72 of 2022); we found no later amendment to Table G as at 24 October 2026. Confirm the current text before building a strategy around a specific percentage.
Tax treatment
The Tax Laws (Amendment) Act 2024, in force from 27 December 2024, raised the deductible limit for contributions to a registered pension or provident fund from KES 240,000 to KES 360,000 a year (KES 30,000 a month) and made contributions to a post-retirement medical fund deductible up to KES 15,000 a month. On RBA’s reading of the Act, benefits are tax-exempt where a member has reached the scheme’s retirement age, withdraws early on ill health, or withdraws after at least 20 years of membership, and registration with RBA alone now suffices for a scheme’s tax treatment, without separate registration with the Kenya Revenue Authority.
Investment limits
This table decides everything else in this guide. Every manager’s pitch, every private placement to a scheme and every trustee investment decision has to fit inside these ceilings.
Each limit is a maximum percentage of the aggregate market value of a scheme’s (or pooled fund’s) total assets. A scheme’s own investment policy statement may set narrower limits, never wider ones. The right-hand column shows where the industry actually stood in June 2026.
| Item | Asset class (summary) | Maximum | Held, June 2026 |
|---|---|---|---|
| 1 | Cash and demand deposits with Kenyan licensed banks | 5% | 2.05% |
| 2 | Fixed and time deposits and certificates of deposit with Kenyan licensed banks | 30% | 1.56% |
| 3 | Listed corporate bonds, mortgage bonds, CMA-approved loan stocks and other listed fixed-income instruments, and matching collective investment schemes | 20% | 1.18% |
| 4 | Commercial paper and non-listed debt of private companies with an investment-grade rating from a CMA-registered rating agency | 10% | 1.42% |
| 5 | East African Community government securities and infrastructure bonds issued by public institutions (the 100% applies to a scheme receiving statutory contributions) | 90% or 100% | 46.35% |
| 6 | Preference and ordinary shares listed on an EAC securities exchange, and matching collective investment schemes | 70% | 14.37% |
| 7 | Unlisted shares of companies incorporated in Kenya | 5% | 0.25% |
| 8 | Offshore bank deposits, government securities, listed equities, rated corporate bonds and collective investment schemes | 15% | 3.43% |
| 9 | Immovable property in Kenya and property funds | 30% | 7.97% |
| 10 | Guaranteed funds | 100% | 19.35% |
| 11 | Exchange-traded derivatives approved by the CMA | 5% | Not reported |
| 12 | Listed and unlisted Kenyan real estate investment trusts approved by the CMA | 30% | 0.64% |
| 13 | Private equity and venture capital | 10% | 1.40% |
| 14 | Any other asset (needs RBA’s prior written approval) | 10% | 0.02% |
| 15 | Debt instruments financing infrastructure or affordable housing projects under the Public Private Partnerships Act or as prescribed by the relevant Cabinet Secretary | 10% | No figure published |
Limits: Table G, Retirement Benefits (Forms and Fees) Regulations. Industry shares: RBA, June 2026 industry report. Industry shares are averages across all schemes; a single scheme can be much closer to a ceiling.
The concentration rules
Several rules sit underneath the table and often bind before a class ceiling does:
- One issue, one issuer (regulation 18A): a scheme may not invest more than 15% of its pension funds in one issue in any asset class, nor hold more than 15% of the total available securities issued by a single issuer. Government securities are excluded.
- One listed company (regulation 38(1)(c)): quoted equity of any one company is capped at 15% of total assets.
- The sponsor’s own group (regulation 38(1)(d)): unquoted equity, commercial paper, loan stock and debentures issued by a company controlled by or related to the sponsor are capped at 3% of total assets; quoted equity in such companies at 10%.
- Temporary breaches (regulation 38(1)(a) and (b)): a limit may be exceeded because of market price rises, bonus issues or shifts between classes, but not for more than 90 days. An excess caused by revaluing property must be reported to RBA at once with an action plan.
- Any other asset (regulation 38(1)(e)): needs RBA’s prior written approval, which RBA is to consider within 30 days of the application.
The ceilings cap what a scheme may hold in each class, not what it must hold, and the total across all classes cannot exceed 100% of fund assets. The investment guidelines do not apply to an approved issuer investing guaranteed funds.
Table G allows 100% in government securities “in the case of scheme receiving statutory contributions”. The Regulations do not list which schemes qualify, so confirm the position for a specific scheme before relying on the higher figure.
The gap between the ceilings and actual use is widest in the classes most relevant to managers and issuers: offshore (3.43% against 15%), private equity (1.40% against 10%), REITs (0.64% against 30%) and unlisted shares (0.25% against 5%). That headroom is the opportunity this guide is written for.
Appointing a fund manager
A fund manager needs two approvals before it can lawfully manage a Kenyan scheme’s money: a Capital Markets Authority (CMA) licence to act as a fund manager at all, and RBA registration to act for a retirement benefits scheme.
CMA licensing
Fund managers are licensed under the Capital Markets Act, Cap. 485A. The Capital Markets (Licensing Requirements) (General) Regulations 2025 (Legal Notice 197 of 2025, published on 11 December 2025) replaced the earlier licensing regulations.
| Requirement | Position |
|---|---|
| Minimum capital (regulation 39(1)) | Shareholders’ funds of at least KES 20 million at all times (previously KES 10 million paid-up capital) |
| Application fee | KES 10,000 |
| Licensing fee | KES 100,000, or KES 50,000 for a fund manager licensed under the Retirement Benefits Act |
| Annual regulatory fee: collective investment schemes | 0.05% of assets under management, minimum KES 100,000, maximum KES 15 million |
| Annual regulatory fee: other mandates | 0.01% of assets under management for non-collective schemes other than pension funds, maximum KES 15 million |
| Transition (regulation 58) | Existing licences continue; additional requirements must be met within twelve months of commencement |
RBA registration
Under the Retirement Benefits (Managers and Custodians) Regulations, a manager and a custodian must each be registered with RBA before handling scheme assets.
- Capital: a manager needs minimum paid-up share capital of KES 10 million; a custodian KES 250 million, in each case “or as may be prescribed from time to time”.
- Decision time: RBA has 90 days from receipt of an application to decide it.
- People: a manager’s top management, including its board, must include people academically and professionally qualified in banking, insurance or law, and in accounting, actuarial studies, finance, economics or the investment of scheme funds.
- Cross-recognition: RBA may accept a CMA fund manager licence as manager registration, and a CMA authorised depository registration as custodian registration, but only subject to an agreement to that effect between CMA and RBA.
- Appointment: the trustees appoint the manager and custodian on terms set out in writing, and the agreement must provide for how fees are computed.
The two regimes set different minimums: KES 20 million in shareholders’ funds for a CMA-licensed fund manager, and KES 10 million paid-up capital for RBA registration. A manager that holds both must meet both, which in practice means the CMA figure. Confirm capital adequacy against each regulator’s current requirement before signing a new mandate.
Alternative investment funds
The Capital Markets (Alternative Investment Funds) Regulations 2023 (Legal Notice 170 of 2023) regulate funds that privately pool money from at least two and not more than one hundred investors, including equity, debt, hedge, property and infrastructure funds. A fund needs CMA approval before it operates; its manager must appoint a CMA-licensed custodian and submit a placement memorandum to CMA for approval before pooling capital; money may be raised only by private placement; and no participant may make an initial investment below KES 1 million. This is the structure most private equity and venture capital vehicles seeking pension capital will sit inside.
Alternative investments
Private equity, infrastructure, real estate and offshore assets have the most regulatory headroom relative to actual use, and also the least direct route to scheme capital.
| Class | Held | Six-month change | Ceiling |
|---|---|---|---|
| Offshore | KES 105.69bn (3.43%) | +24.1% | 15% |
| Private equity | KES 43.14bn (1.40%) | +44.1% | 10% |
| Commercial paper and non-listed bonds | KES 43.81bn (1.42%) | +263.4% | 10% |
| REITs | KES 19.66bn (0.64%) | +36.8% | 30% |
| Unquoted equities | KES 7.83bn (0.25%) | −12.1% | 5% |
Source: RBA, June 2026 industry report (change measured against December 2025).
Private equity and venture capital
Capped at 10% of scheme assets. A scheme does not simply write a cheque to a private company: in practice it invests through a manager mandated to deploy into the asset class, usually into a vehicle approved under the Alternative Investment Funds Regulations (Chapter IV). Holdings stood at about KES 43 billion in June 2026, a small fraction of the ceiling, which is why private equity and venture capital managers increasingly pitch pension money as an underused domestic pool.
Infrastructure
Debt instruments financing infrastructure or affordable housing projects, under the Public Private Partnerships Act or as prescribed by the relevant Cabinet Secretary, have their own 10% class (item 15). This is separate from infrastructure bonds issued by public institutions, which fall within the 90% government securities class (item 5). A project seeking scheme debt, rather than government-backed bond exposure, needs to be structured as a qualifying item 15 instrument.
Real estate
Direct immovable property in Kenya is capped at 30% (item 9), and CMA-approved REITs, listed or unlisted, have their own 30% class (item 12). A developer has two broad routes: a direct property transaction that the trustees approve and hold, or a REIT that lets several schemes take exposure without each holding the asset. The REIT route is usually more scalable for a developer courting several schemes.
Offshore
Capped at 15% (item 8), covering offshore bank deposits, government securities, listed equities, rated corporate bonds and collective investment schemes. Offshore holdings were 3.43% of industry assets in June 2026, so most of the allowance is unused.
The trustee board
Investment limits control what a scheme can buy. Governance rules control who decides. The Retirement Benefits (Good Governance Practices) Guidelines 2018 set out what a properly run trustee board looks like.
| Topic | Requirement | Guidelines |
|---|---|---|
| Skills | A broad mix of skills, with at least one trustee professionally qualified in finance | Para. 19(2)(c) |
| Gender | Board composition takes gender balance into account | Para. 19(2)(d) |
| Tenure | Staggered, so that no more than one-third of trustees retire at the same time | Para. 19(2)(e) |
| Succession | Scheme rules cover the succession process on the board | Para. 13(3)(e) |
| Other boards | No more than three scheme boards at once; a chairperson no more than two | Para. 21(7) and (8) |
| Training | Trained and certified within six months of appointment, in an RBA-approved programme | Para. 23(2)(a) |
| Code of conduct | The board establishes a code of conduct, and each trustee signs it | Paras. 10 and 11(2) |
| Conflicts | A written conflicts policy and a conflicts register updated at each board meeting | Para. 49(2) |
| Risk | A written risk management policy and procedures, and a risk register | Paras. 40 and 41(3) |
| Disclosure | The board reports in the audited financial statements how far it has followed the principles of good governance | Para. 50(1) |
The Act adds its own controls: section 26 lists the grounds on which a person is disqualified from being a trustee and requires RBA approval of trustee appointments.
Corporate trustees
The Retirement Benefits (Corporate Trustees) Regulations 2023 (Legal Notice 103 of 2023) set up registration for corporate trustees. An applicant needs paid-up share capital, including unimpaired reserves, of at least KES 10 million; top management and directors qualified in fields such as banking, insurance, law, accounting or actuarial studies; and a board with at least four Kenyan nationals, one of whom has expertise in finance. RBA decides an application within 90 days, and directors and top management must complete the training and certification RBA directs. For a sponsor appointing individual trustees, or a provider offering corporate trusteeship, the six-month training window and these registration steps belong in the onboarding plan, not the background.
Trustee duties and liability
Section 40 of the Act is short, but it is where a trustee’s personal exposure starts. It requires trustees, and managers, custodians and administrators, to:
- ensure the scheme fund is at all times managed in accordance with the Act, the regulations, the scheme rules and the directions of RBA’s Chief Executive Officer;
- take reasonable care that the scheme is managed in the best interests of members and sponsors;
- report to the Chief Executive Officer, as soon as reasonably practicable, any unusual occurrence that could jeopardise members’ or sponsors’ rights; and
- report contributions that remain due for more than thirty days.
This statutory standard sits above whatever the trust deed or investment policy statement says.
| Failure | Consequence |
|---|---|
| Investing contrary to the guidelines, or lending scheme funds (s. 38) | RBA may disqualify the person from managing, holding in custody or administering any scheme fund (s. 38(2)) |
| Contravening a Chief Executive Officer’s direction on an unsafe or unsound practice (s. 39) | Offence: fine up to KES 500,000, imprisonment up to two years, or both (s. 39(2)) |
| Trustee failing to submit audited accounts (s. 34(4A) and (4B)) | Offence: fine up to KES 500,000, imprisonment up to two years, or both, plus KES 5,000 for each day the offence continues |
| Late submission of audited accounts (s. 34(4C)) | Penalty of KES 100,000 plus KES 1,000 for each day the returns remain unsubmitted; payment does not bar prosecution |
| No investment policy statement, or no professional advice obtained (reg. 37(6)) | RBA may direct that a trustee cease to be a trustee |
A trustee who follows a written investment policy statement that sits inside Table G, and who reports anything unusual promptly, is acting inside section 40. The exposure arises where a manager is allowed to drift outside the mandate, or an irregularity is known and not reported.
Clay Odari, Lead Counsel
For a corporate sponsor, the people it nominates to a trustee board take on personal statutory duties, not an administrative role on the company’s behalf. Training, insurance where available, and delegation of investment decisions to a properly appointed and currently licensed manager are the practical ways to manage that exposure. The section 40 duty itself cannot be delegated away.
For issuers and investees
A business seeking pension capital, whether as a bond issuer, a private equity portfolio company, a developer or an infrastructure sponsor, is not selling to the scheme directly. It is selling to a manager working inside fixed ceilings, and the pitch should be built around that.
Know your class and its headroom
A listed bond competes for room in the 20% listed corporate bond class; an unlisted rated note in the 10% commercial paper and non-listed debt class; a private equity raise in the 10% private equity class. Identify the class first, then check how much room schemes actually have left in it.
Plan around the concentration limits
Regulation 18A stops a scheme putting more than 15% of its funds into one issue, or holding more than 15% of one issuer’s securities. A sizeable raise therefore needs several schemes, or a pooled vehicle, not one bilateral placement.
Check for sponsor links
If the issuer is the scheme sponsor or a related company, much tighter limits apply: 3% of total assets for its unquoted equity and debt, 10% for its quoted equity.
Go through a licensed, registered manager or a qualifying vehicle
Capital moves through a CMA-licensed, RBA-registered manager mandated by schemes or, for a pooled private equity or venture capital raise, an approved alternative investment fund with its own licensed manager and custodian. Approaching trustees directly, with no properly appointed manager in the chain, is not how this system works.
Use a REIT for property aimed at several schemes
A REIT lets several schemes take exposure inside their own 30% REIT allocation without each one holding and managing the property, usually a faster route to scale than a series of direct sales.
Build the file the trustees will need
Because trustee exposure runs with the investment decision, a manager will want audited financials, legal opinions and title or security documents that show the investment fits the scheme’s policy statement and Table G. Assemble the file before approaching managers, not after an expression of interest.
Trustee checklist
An at-a-glance version of Chapters III, VI and VII, for a sponsor or a newly appointed trustee to confirm before signing off the next investment decision.
Confirm the investment policy statement is current
It should sit inside Table G, reflect the scheme’s actual risk appetite, be based on written independent advice, and have been resubmitted to RBA within the last three years.
Verify every manager and custodian holds live approvals
Current CMA licensing and current RBA registration for each appointment, and a written agreement that sets out how fees are computed.
Test concentration limits on every placement
15% per issue and per issuer under regulation 18A (government securities aside), 15% per listed company, and the 3% and 10% sponsor-related limits.
Fix any temporary breach within 90 days
Track excesses caused by price movements and report a property revaluation excess to RBA at once with an action plan.
Check board composition
At least one finance-qualified trustee, staggered tenures, gender balance considered, and no trustee on more boards than the Guidelines allow.
Train every trustee within six months
Track appointment dates against the six-month window and keep evidence of certification on file.
Keep the conflicts register live
Update it at every board meeting and take a fresh declaration from each new trustee.
Maintain the risk policy and risk register
Reviewed on a set cycle, not only after an incident.
Report to RBA promptly
Unusual occurrences, and contributions overdue by more than thirty days, are section 40 duties, not judgement calls.
File audited accounts on time
Late filing carries its own penalty and daily fines under section 34, separate from any investment exposure.
Document every alternative allocation
Private equity, infrastructure debt, offshore and REIT decisions should each have a paper trail showing how they fit the policy statement and Table G; “any other asset” needs RBA’s prior approval.
Frequently asked
15% of a scheme’s total assets, under item 8 of Table G. Industry offshore holdings were 3.43% of assets in June 2026, so most schemes have significant unused headroom.
Within limits. Unlisted shares of Kenyan companies are capped at 5% and private equity and venture capital at 10%. In practice private equity exposure is taken through a manager mandated for the asset class, usually via a fund approved under the Capital Markets (Alternative Investment Funds) Regulations 2023.
Yes. The CMA licence authorises the firm to act as a fund manager; RBA registration under the Managers and Custodians Regulations authorises it to handle scheme assets. RBA may accept a CMA licence as registration only where CMA and RBA have an agreement to that effect.
Under section 38(2) RBA may disqualify the person responsible from managing, holding in custody or administering any scheme fund. Contravening a Chief Executive Officer’s direction on an unsafe or unsound practice is an offence under section 39(2), carrying a fine of up to KES 500,000, up to two years’ imprisonment, or both.
Under regulation 18A, no more than 15% of its pension funds in one issue in any asset class, and no more than 15% of the total securities issued by a single issuer. Quoted equity of any one company is also capped at 15% of total assets. Government securities are excluded from regulation 18A.
Yes. They sit in subsidiary legislation (Table G of the Forms and Fees Regulations, applied by regulation 38 of the occupational schemes regulations), not in the Act, so they can be changed without amending the Act. Confirm the current text before relying on a specific percentage.
Sources
Primary sources first. Press reports are marked as such. Where an RBA document could not be opened directly, the mirror used is marked.
- Retirement Benefits Act, Cap. 197, sections 26, 34, 37, 38, 39 and 40 (version from 11 December 2023)Primary
- Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations, regulations 37 and 38Primary
- Retirement Benefits (Forms and Fees) Regulations, regulations 18 and 18A and Table GPrimary
- Retirement Benefits (Managers and Custodians) Regulations, regulations 4, 5, 7 and 8Primary
- Retirement Benefits (Good Governance Practices) Guidelines 2018Primary
- Retirement Benefits (Corporate Trustees) Regulations 2023 (L.N. 103 of 2023)Primary
- Capital Markets (Licensing Requirements) (General) Regulations 2025 (L.N. 197 of 2025)Primary
- Capital Markets (Alternative Investment Funds) Regulations 2023 (L.N. 170 of 2023)Primary
- RBA, industry performance reports (including the updated report as at June 2026)Primary
- RBA, Retirement Benefits Industry Report as at June 2026 (text as mirrored by RegAlert)Mirror
- RBA, Kenya’s pension assets rise to KES 2.81 trillion in 2025 (4 March 2026)Primary
- RBA, the Tax Laws (Amendment) Act 2024 and the retirement benefits sectorPrimary
- Kenya Revenue Authority, amendments to PAYE computation under the Tax Laws (Amendment) Act 2024Primary
- Capital FM, Kenya’s pension assets up 12.66% to KES 3.17 trillion (August 2026)Press
Get the structure right before the pitch
Tell us whether you manage, oversee or are seeking pension money. We will tell you which approvals and limits apply and how to structure the route in.