The Kenya Electricity Generating Company (KenGen) has acquired two office properties from its staff pension scheme for Sh1.92 billion, helping the fund meet prescribed investment thresholds.
Disclosures from the KenGen Staff Retirement Benefits Scheme show that KenGen, which sponsors the fund, acquired the eight-storey Pension Plaza 1 and 12-storey Pension Plaza 2 in the year ended December 2025. The two are on Kolobot Road, opposite Stima Plaza, in Parklands, Nairobi.
The disposal of the buildings helped the pension fund cut its allocation to property to 20.39 percent from 42.4 percent the previous year, making it compliant with investment regulations and boosting its liquidity.
The reduction means the scheme is now in compliance with the Retirement Benefits Authority (RBA) investment guidelines, which caps exposure to immovable property at 30 percent of total assets.
“The scheme disposed of Pension Plaza 1 and Pension Plaza 2 to the sponsor as part of a strategic portfolio rebalancing initiative. The disposal was primarily undertaken to ensure compliance with the RBA investment guidelines, particularly the prescribed limits on property exposure,” the scheme said in its annual report.
“Given that the scheme is mature and closed to new members, there is an increasing need to align the investment portfolio towards more liquid and income-generating assets to support benefit payments and enhance cash flow flexibility.”
The scheme, which operates a Defined Benefits (DB) plan that has been closed to new members since December 2011, has increasingly shifted focus towards liquid, income-generating assets to meet benefit obligations.
A Defined Contributions (DC) scheme replaced the DB plan from January 2012.
The disposal of the two properties was informed by independent valuations, with the scheme’s valuer placing the assets at Sh2 billion, while the National Land Commission assessed them at Sh1.8 billion.
The final transaction price of Sh1.9 billion, exclusive of VAT, fell within the valuation range, supporting what trustees described as a fair market outcome.
The scheme said proceeds from the sale have been redeployed into higher-yielding fixed income and money market instruments, boosting returns and improving liquidity.
It reported that the new investments are generating returns above the actuarial assumed rate of 10 percent, strengthening its funding position.
“This strategic reallocation has enhanced income generation, improved asset-liability matching and is expected to accelerate progress towards full funding by contributing to a reduction in the actuarial deficit,” the scheme said in its report.
The bulk of the scheme’s investments are in government securities, which took up 66.1 percent or Sh6.53 billion of the total investments of Sh9.88 billion. Properties come second at Sh2.01 billion or 20.39 percent, followed by equities at Sh980.55 million or 9.92 percent.
The disposal of the buildings is part of a wider property exit strategy being implemented by the fund. Another key asset, RBS Gardens, remains under management, with preparations ongoing for its sale.
Pension schemes have in recent years been under pressure to review asset allocation strategies, especially those with mature memberships and limited inflows.
For closed DB schemes such as KenGen’s, the need to prioritise liquidity has become more urgent as benefit payments rise and contribution inflows decline.
KenGen’s acquisition of the two buildings effectively transfers the real estate assets back to the sponsor while allowing the pension scheme to unlock the capital tied up in such property.
The trustees said they would continue to monitor asset allocation levels to ensure sustained compliance with RBA limits while maintaining optimal diversification and returns.
