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The Influence of Pension Scheme Maturity on Investment Strategies of Pension Funds in Kenya

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  • Wilson Ngugi
  • Amos Njuguna
  • Francis Wambalaba

Abstract

The longevity risk borne by members of defined contribution pension schemes and the funding risk borne by sponsors of defined benefit pension funds have shifted attention to the investment strategies employed by pension funds. We use secondary data from 206 occupational retirement benefits schemes in Kenya, to examine the influence of pension scheme maturity on investment strategies. We then triangulate the results using focused group discussions with industry experts. Results from the regression models indicate that scheme maturity does not influence the investment strategies of occupation schemes in Kenya contrary to life cycle theory. The Retirement Benefits Authority and trustees of retirement benefits schemes in Kenya are advised to offer members’ investment choices coupled with education to enable them make decisions to reduce their exposure to risky assets as they age.

Suggested Citation

  • Wilson Ngugi & Amos Njuguna & Francis Wambalaba, 2021. "The Influence of Pension Scheme Maturity on Investment Strategies of Pension Funds in Kenya," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(10), pages 1-1, July.
    • Handle: RePEc:ibn:ijbmjn:v:13:y:2021:i:10:p:1
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    References listed on IDEAS

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    1. Pablo Antolin & Stéphanie Payet & Juan Yermo, 2010. "Assessing Default Investment Strategies in Defined Contribution Pension Plans," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2010(1), pages 87-115.
    2. Deborah J. Lucas & Stephen P. Zeldes, 2009. "How Should Public Pension Plans Invest?," American Economic Review, American Economic Association, vol. 99(2), pages 527-532, May.
    3. Alestalo, Noora & Puttonen, Vesa, 2006. "Asset allocation in Finnish pension funds," Journal of Pension Economics and Finance, Cambridge University Press, vol. 5(1), pages 27-44, March.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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