By Benadeta Mwaura - Reporter
Kenya July 8 2026 - Kenya's pension industry posted a record KSh16.6 billion in capital gains from the sale of government bonds and listed shares in 2025, buoyed by declining interest rates, a strong recovery at the Nairobi Securities Exchange (NSE) and improved corporate earnings.
New data released by the Retirement Benefits Authority (RBA) shows pension schemes realized KSh11.3 billion from the disposal of Kenya Government securities and KSh5.3 billion from the sale of quoted equities during the year, marking the highest gains ever recorded from the two asset classes.
The performance represents a dramatic improvement from 2024, when pension funds earned just KSh2.05 billion from government securities and KSh986.5 million from listed shares, highlighting the strong rebound in Kenya's capital markets over the past year.
According to the RBA, the surge in investment returns was largely driven by favourable conditions in both the fixed-income and equity markets.
"The increase was primarily driven by substantial gains from disposal of Kenya government securities and quoted shares, reflecting favourable movements in both the fixed-income and equity markets during the year," the authority said.
The gains from bond trading came as interest rates continued to ease following a series of monetary policy adjustments by the Central Bank of Kenya (CBK).
In bond markets, prices move inversely to interest rates, meaning previously issued bonds carrying higher coupon rates become more valuable when market yields decline.
This allowed pension schemes holding older, high-yield government securities to sell them at a premium in the secondary market, locking in substantial capital gains.
At the same time, improved investor confidence and stronger corporate earnings lifted share prices on the Nairobi Securities Exchange, enabling retirement schemes to realize significant profits from equity disposals.
The record earnings were sufficient to offset losses incurred elsewhere in pension portfolios. RBA data shows schemes recorded KSh456.9 million in losses from the disposal of real estate assets during the year, reflecting the continued weakness in Kenya's property market.
Nevertheless, the strong performance in bonds and equities ensured overall investment returns remained positive.
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The latest figures underscore the growing importance of active portfolio management among pension fund managers, who have increasingly taken advantage of favourable market movements to enhance returns for millions of retirement savers.
Kenya's pension industry remains one of the country's largest institutional investors, with substantial holdings in government securities, listed equities, property, corporate bonds and alternative investments. Government securities continue to account for the largest share of pension assets because of their relatively low risk and stable returns.
The strong bond market performance coincides with increased government borrowing through domestic debt markets. The Central Bank has continued issuing long-term Treasury bonds to finance the national budget while also conducting bond-switch operations aimed at reducing refinancing risks associated with maturing debt.
Meanwhile, Kenya's equities market has staged a strong recovery over the past year, supported by improved macroeconomic conditions, easing inflation, exchange rate stability and renewed investor confidence. Banking stocks, telecommunications companies and manufacturing firms have been among the key drivers of the market's resurgence.
Analysts say declining interest rates have also encouraged investors to shift part of their portfolios toward equities as returns on fixed-income investments gradually moderate. At the same time, pension schemes have continued diversifying their investment strategies to improve long-term returns while safeguarding members' retirement savings.
The record gains highlight the resilience of Kenya's pension sector despite broader economic challenges and demonstrate how improved financial market conditions can translate into stronger retirement savings growth.
With interest rates expected to remain relatively stable and corporate profitability improving, pension fund managers are likely to continue balancing fixed-income investments with selective equity exposure to maximize returns while managing investment risk.