The National Social Security Fund (NSSF) paid a record KSh 1.10 billion in investment bills in FY2024/25, driven by a 61% jump in payments to external fund managers that has intensified scrutiny over the cost of managing members’ savings.
- •Fund manager fees spiked to KSh 756.9 million, the highest ever and accounting for nearly seven out of every ten shillings spent on investment management.
- •NSSF reported a 22% portfolio return, raising fresh questions about whether higher costs reflect superior performance or simply more expensive mandates.
- •NSSF has gradually diversified its investments beyond traditional fixed-income securities into equities, real estate, and alternative assets, all which typically attract higher management costs, particularly when private markets or performance-based mandates are involved.
The increase in investment-related expenses marks a significant rise over recent years. Total investment costs rose from KSh 534.9 million in 2020 to KSh 1.10 billion in 2025, more than doubling in five years, even as NSSF’s asset base expanded to about KSh 575 billion.
The pace of growth in fund managers’ fees accelerated sharply in 2025. Fees rose 11% between 2023 and 2024, before jumping 61% in 2025. External fund managers accounted for about 69% of total investment-related expenses in 2025, making them the largest single cost component in the Fund’s investment operations. This concentration means changes in fee structures have a direct impact on overall investment costs.
The rise was not limited to fund managers. Custodian fees increased 46% to KSh 181.3 million in 2025 from KSh 124.2 million a year earlier, while actuarial and investment advisory costs rose 54% to KSh 70 million. These changes reflect a broader investment framework that now includes government securities, listed equities, commercial property, and alternative assets.
Property-related expenses remained relatively stable in comparison. Estate management costs stood at KSh 47.1 million in 2025, broadly unchanged from the previous year, while land rent and rates fluctuated but did not materially drive the overall increase in costs.
Despite the higher costs, NSSF reported a 22% investment return for FY2024/25, compared with 12% in the previous year. The return was achieved in a period when Kenyan fixed-income markets strengthened and equity markets posted solid gains, according to publicly available market data.
NSSF has not publicly disclosed a detailed breakdown of the factors behind the increase in investment bills, including whether it was driven primarily by a larger asset base, changes in portfolio composition, or performance-linked payments. The absence of this detail makes it difficult to compare NSSF’s cost structure with that of other large pension funds in Kenya and the region.
As NSSF expands its investment footprint, stakeholders, including regulators and contributors, are likely to seek greater transparency on how investment fees are determined and benchmarked.
