Assessment of the Scale, Gender Diversity, and Financial Proficiency of University-Based Pension Funds in Kenya: The Influence of Board Structure on Performance

Abstract

Aim This study examined the relationship between pension fund board characteristics and the financial performance of Kenyan universities’ pension funds. It focused on board size, gender diversity, and financial expertise as the independent variables and their effect on financial performance measured by ROA. Design/Methodology: The study used an explanatory design within the positivism paradigm. Panel data from 26 universities' pension funds in Kenya covering the period of 8 years (2015–2022) yielded 208 observations. Secondary data were obtained from the annual returns to the Retirement Benefits Authority. The theories underpinning the study were Agency Theory and Resource Dependency Theory. Findings: The mean board size was 7 trustees; the Mean number of women was 2; the Mean number of trustees with financial expertise was 3; the Mean age of the pension funds was 17.4 years while the mean fund size was Ksh 24.2 Billion. Regression results showed that Board size positively influenced financial performance ROA (β = 0.0193, ρ=0.007), Gender diversity positively affected financial performance (β = 0.0006, ρ=0.0022) Financial expertise influenced financial performance ((β = 0.098, ρ=0.005). Conclusion: This study provides robust evidence that board characteristics significantly influence the financial performance of universities' pension funds in Kenya. The positive and statistically significant relationships between Board Size, Gender Diversity, and Financial Expertise with Return on Assets (ROA) highlight the importance of diverse and knowledgeable governance structures. The Retirement Benefits Authority should enforce board composition requirements and capacity-building initiatives to strengthen pension fund governance. Certification programs and training will enhance board competencies, improving investment strategies and stakeholder confidence. These measures will ensure the stability and sustainability of Kenya’s pension industry.