Effect of Scheme Structure on Income Tax Compliance among Registered Pension Schemes in Central Business District, Nairobi County, Kenya

Income tax revenue is critical for governments to finance development projects and provide public services. However, tax non-compliance undermines tax collection efforts. Pension schemes are significant taxpayers but exhibit uneven levels of compliance. Understanding factors influencing pension fund compliance is therefore important. The study sought to determine the effect of scheme structure on income tax compliance among registered pension schemes in Nairobi County, Kenya. This study used an explanatory research design. The target population was 412 registered pension schemes in the Central Business District, Nairobi County, and a sample size of 202 respondents. After data collection and preparation, the 172 fully completed questionnaires were received, yielding a strong response rate of 85%. The study collected primary data using questionnaires. Data was analyzed using descriptive and inferential statistics. The study also employed regression analysis to examine the relationships among the study variables. The study found that scheme structure has a significant and positive effect on income tax compliance (β = 0.234, p = 0.002). The findings suggest that the Retirement Benefits Authority (RBA) should enforce stricter governance and process functional standards, including mandatory audits and transparent reporting mechanisms. Policies promoting standardized operational frameworks across pension schemes could improve compliance. Future studies should examine the potential effects of system automation, such as AI-driven tax tools and blockchain-based reporting systems, in further reducing income tax compliance costs and errors.