Financial Performance of Pension Funds in Nigeria

The main objective of this work is to assess the financial performance of pension funds in Nigeria. It starts by describing the pension schemes operating in the country and the various legislation enacted, and then progresses to focus on variables like the net assets under management, income, and profit before tax, on one hand, and variables like density of contribution, expenditure, age of fund, idle contribution, and retirement savings account membership, on the other hand. Taking these variables, a linear regression approach was attempted to measure the profitability obtained by the pension funds’ investments, mainly following the works by Oluoch (2013), Kigen (2016), Ajibade, et al. (2018), and Adekoya, Nwaobia, & Siyanbola, 2022. The study applied quantitative secondary data collected for 20 pension fund administrators. The sources are the annual financial statements of the administrators and the annual report of the regulator, the National Pension Commission. Although some of the proposed specifications do not satisfy the regression assumptions, due for instance to the presence of multicollinearity among variables, it was still possible to fit a model that provides useful results. The main conclusions confirm that the density of contribution has a positive significant effect on the financial performance of pension funds in Nigeria, measured by profit before tax, while idle contribution and age of fund have no significant effect on this performance.