Asian Journal of Economics, Finance and Management

Pension schemes are critical to national economic stability, offering retirement income security and supporting long-term financial planning. While global studies have explored determinants of pension fund performance, limited evidence exists in the Kenyan context. This study investigated the effect of firm characteristics on the financial performance of pension schemes in Kenya, focusing on fund size, fund design, portfolio mix, and membership age, while also examining the moderating role of regulatory frameworks. Anchored on Stakeholder Theory, Agency Theory, and the Theory of Constraints, the study employed a descriptive research design targeting 1,075 registered pension schemes, with a purposive sample of 39 schemes. Secondary data from annual reports (2018–2022) were analyzed using SPSS Version 20, employing both descriptive and inferential statistics. Multiple regression analysis, supported by diagnostic tests, confirmed model reliability. The findings revealed that fund size, portfolio composition, and membership age significantly and positively influenced financial performance, whereas fund design had a significant negative effect. Furthermore, the regulatory framework moderated the relationship between firm characteristics and financial outcomes. The conclusion of study concludes that these characteristics are critical determinants of pension fund performance in Kenya. Key recommendations include encouraging consolidation strategies to achieve economies of scale, diversifying investment portfolios to enhance returns, attracting younger contributors to ensure sustainability, transitioning from defined benefit to contributory schemes, and strengthening regulatory oversight to foster innovation and compliance. These insights contribute to policy and practice, offering actionable strategies to enhance pension fund sustainability and performance in Kenya.