A Critical Evaluation of Determinants of Pension Fund Performance in Kenya

Purpose: This study examines the influence of corporate governance, investment strategy, and macroeconomic factors on the financial performance of pension funds in Kenya from 2012 to 2022. Methodology: Using a mixed-methods approach, the study combines primary survey data with secondary macroeconomic data. Governance and investment strategy were measured through survey-based indices, while macroeconomic variables were sourced from national datasets. A multi-equation analytical framework assessed direct, mediating, and moderating effects. Findings: The findings show that corporate governance significantly enhances pension fund performance, with investment strategy mediating this relationship. Macroeconomic factors also significantly affect returns, though their impacts vary across variables. Unique Contribution to Theory, Practice and Policy: The study extends Agency Theory, Stakeholder Theory, Modern Portfolio Theory, and Arbitrage Pricing Theory to a developing-country pension context, showing that they jointly explain pension fund ROI. It finds that corporate governance, investment strategy, and macroeconomic factors collectively influence performance. Stakeholder involvement improves returns, investment strategy mediates the governance–performance link, and macroeconomic factors moderate this relationship, offering practical insights for enhancing pension fund sustainability.