Enhancing Efficiency of Pension Schemes through Effective Risk Governance: A Kenyan Perspective

Paper: arXiv 2511.11416

Authors: Sylvester Willys Namagwa

Abstract

The efficiency of pension schemes in Kenya invites elevated interest owing to the increasing pension contribution amounts and the expectation that benefits paid out of these schemes would protect members from old age poverty. The study investigates the intervening effect of risk management on the relationship between corporate governance and the efficiency of pension schemes in Kenya. The study employs panel data consisting of 896 observations from 128 schemes in a sample period from 2015 to 2021. The study finds that risk management significantly mediates the relationship between employee representatives on the board of trustees, as a component of corporate governance, and the efficiency of pension schemes. Consequently, the mediation effect of risk management indicates that when employee representatives are involved in governance, the presence of strong risk management practices ensures that their contributions lead to improved efficiency. Risk management, therefore, serves as a critical safeguard that enables governance structures to function more effectively and contribute to the overall performance of the scheme.

Complexity vs Empirical Score

• Math Complexity: 2.5/10
• Empirical Rigor: 6.5/10
• Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper uses standard empirical econometric methods (Data Envelopment Analysis and Baron-Kenny mediation regression) on a substantial panel dataset of 128 Kenyan pension schemes. While mathematically straightforward, it provides a solid empirical assessment of pension risk governance in an emerging market context.

Research Flowchart

  flowchart TD
    A["Research Goal: Investigate Risk Management's<br/>Mediating Effect on Pension Governance & Efficiency"] --> B["Data Collection: 128 Kenyan Pension Schemes<br/>(896 Panel Data Observations, 2015-2021)"]
    B --> C["Key Variables: Corporate Governance,<br/>Risk Management, & Scheme Efficiency"]
    C --> D["Panel Data & Mediation Analysis"]
    D --> E["Findings: Risk Management Significantly Mediates<br/>Employee Board Representation & Scheme Efficiency"]
    E --> F["Conclusion: Risk Management Acts as a Safeguard<br/>Enabling Governance to Boost Efficiency"]

Cited References (17)

1. Protection Gaps in Insurance for Natural Hazards and Retirement Savings in Asia (2025) — link
2. Perspectives on Integrating Risk Management and Sustainability for Financial Performance: A Systematic Literature Review (2025) — link
3. Management Innovativeness and Growth of Occupational Pension Schemes in Kenya (2025) — link
4. The importance of pension and financial knowledge for pension plan participation in Italy (2025) — link
5. Pension Markets in Focus 2024 (2024) — link
6. Managing the shortfall risk of target date funds by overfunding (2024) — link
7. Saving for retirement in Europe: the long-term risk-return tradeoff (2023) — link
8. The Impact of Risk Management on Firm Performance: Corporate Governance as Moderating Variable (2023) — link

0 of 17 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.