Corporate Governance Practices and Performance of an Employee Pension Scheme Within KCB Bank

Abstract

Employee pension schemes play a critical role in ensuring long-term financial security for employees, and their performance is largely influenced by the corporate governance practices adopted by the sponsoring institutions. In the Kenyan banking sector, institutions such as KCB Bank have established employee pension schemes to safeguard employees’ retirement benefits; however, limited empirical evidence exists on how corporate governance practices influence the performance of these schemes. With this in mind, this research explored the influence of corporate governance practices on the performance of employee pension schemes within KCB Bank, Kenya. The study specifically examined the effect of board composition, stakeholder involvement, compliance, and structural considerations on the performance of employee pension schemes. Stewardship theory, resource-based view theory, stakeholder theory, systems theory and the Ansoff growth matrix theory was this study’s theoretical guide. The adopted research design was a descriptive one, targeting a population of 128 respondents drawn from trustees, scheme administrators, fund managers, custodians, secretariat staff, and scheme members. Stratified random sampling method led to 64 respondents chosen for this research. Primary data were collected using questionnaires. Content validity was applied to assess validity, while reliability was through using the Cronbach alpha for testing with values within the range of 0.7 being acceptable. Quantitative data were analysed using descriptive statistics, including means and standard deviations, and inferential analysis was done using both multiple regression as well as correlation analysis. The findings established that structural considerations had a positive and statistically significant influence on the performance of employee pension schemes, while compliance also demonstrated a positive and significant influence. Board composition and stakeholder involvement showed positive but statistically insignificant influence on pension scheme performance. The study concluded that well-defined pension scheme structures and strict adherence to regulatory requirements are key drivers of pension scheme performance within the banking sector. The study recommended that pension scheme trustees prioritize appropriate pension scheme structures and strengthen compliance mechanisms, while management invests in governance structures that enhance accountability and sustainability of employee pension schemes. Keywords: Corporate governance practices, performance, employee pension scheme, KCB bank