DETERMINANTS OF FINANCIAL PERFORMANCE OF PENSION FUNDS ADMINISTRATORS IN NIGERIA

Abstract

All over the world, the need for governments seeking ways of lessening the fiscal impact of aging populations and diversifying the sources of retirement income has led to a paradigm shift from the old public pension system to the contributory pension system. Despite all indications about the financial performance of pension fund administrators (PFAs) in the country, the contributors still feel uncertain about the prospects. This provokes research into the determinants of financial performance of pension funds administrators in Nigeria. The specific objectives are to: examine the effect of age of PFAs on their financial performance in Nigeria; assess the influence of pension fund contribution on the financial performance of PFAs in Nigeria; determine the effect of size of PFAs on the, financial performance in Nigeria; evaluate the effect of board size on the financial performance of PFAs in Nigeria and; examine the effect of board composition on the financial performance of PFAs in Nigeria. The population of the study consists of all the twenty-one (21) licensed PFAs in the country as at 31^st December, 2019 out of which a sample of twelve (12) was taken for a study period of 2013 to 2019. The research data gathered for this study, which is from secondary sources only, include annual financial reports and accounts of the sampled firms selected. Both descriptive and inferential statistical tools of analysis were used. The inferential statistics used was panel regression analysis. Normality distribution test of the variables was carried out followed by test for the multicollinearity and heteroskedasticity of independent variables with the use of variance inflation factor (VIF) and Breusch-pagan/cook-weisberg test. The results indicated a positive significant effect of age on return on total assets (ROTA). The result also indicated a positive significant effect of contribution density on return on total assets (ROTA). Firm size as well has a Positive significant effect on return on total assets (ROTA). Board size was found not to have significant effect on return on total assets (ROTA). However, the result indicated a significant effect of board composition on return on total asset (ROTA). Overall, the result of the Wald X² (23.07) with P-value (0.0003) at 5% level of significance, means that the independent variables. of the study have significant effect on financial performance pension fund administrators in Nigeria. The study recommends among others that a well constituted board for enhanced financial performance of PFAs in Nigeria.