Analysis of the Factors That Determine the Choice of Pension Fund Administrator in Kano State
Chapter One
Objective of the study
The objective is aim to investigate the factors that determine the choice of pension fund administrator in Kano State. The specific objectives are;
- To find out the effect of political factor on the choice of pension fund administrator in Kano state
- To find out the effect of environmental factor on the choice of pension fund administrator in Kano state
- To find out the effect of risk factor on the choice of pension fund administrator in Kano state
CHAPTER TWO
REVIEW OF RELATED LITERATURE
CONCEPTS AND MEANING OF PENSION FUND
The pension fund scheme exist to provide post retirement benefits to employees. Pension scheme was introduced into Nigeria during colonial era to provide old age. British citizens income and security upon retirement from active service. Nigeria first ever legislative instrument on pension matter was the pension ordinance of 1951, which had retrospective effect from 1st Jan. 1946. The National Provident Fund (NPF) scheme established in 1961 to address pension matters for private organization followed by Act No. 102 and Armed forces pension Act 103 in 1979. The police and other government agencies pension scheme was enacted under pension Act No. 75 of 1987, followed by Local Pension edict which culminated into establishment of Local Government Staff Pension Board, of 1987.
In the view of Adesina (2006:7), the primary goals of pension system should be to provide adequate, affordable, sustainable and robust retirement income, while seeking to implement welfare improving scheme in manner appropriate to individual country. Adequate system of pension fund scheme provide benefits that are sufficient to prevent old age poverty on a country specific absolute level in addition to providing a reliable means to smooth life time consumption for vast majority of the population, while according to Robalino, D. (2005:120) pension fund scheme should be affordable system in any country, with the financing capacity of individuals and society does not unduly displace other social or economic imperatives or have untenable fiscal consequences. He argued that affordable and sustainable system of pension is one that is financially sound and can be maintained over a foreseeable horizon under a broad set of reasonable assumptions.
The design of a pension fund system or its reforms must explicitly recognize that pension benefits are claims against future economic output (Robert, 2005:112). He further suggested that to fulfil their primary goals, pension systems must contribute to future economic output. Reforms should, therefore be designed and implemented in a manner that supports growth and development and diminishes possible distortions in capital and labour markets. Mean while the corporative vision and mission statement of National Pension Commission according to the Annual Report (2010:1) corporate vision is “To be a world-class organization that ensures the prompt payment of retirement benefits and promotes sustainable pension industry that positively impact on the economic development of Nigeria”. The mission statement is “To be an effective regulator and supervisor that ensures the safety of pension assets and fair return on investment utilizing appropriate technology with highly skilled and motivated staff?
Pension fund therefore is a fund saved while on active service or working which will yield or mahire at old age on retirement from active service for adequate and sustainable health.
Chapter Three
ย ย Research methodology
ย Research Design
The research design adopted in this research work is the survey research design which involves the usage of self-designed questionnaire in the collection of data. Under the survey research design, primary data of this study will be collected from National pension commission of Kano state in order to determine the factors that determine the choice of pension fund administrator in Kano. The design was chosen because it enables the researcher to collect data without manipulation of any variables of interest in the study. The design also provides opportunity for equal chance of participation in the study for respondents.
ย Population of Study
The population of study is the census of all items or a subject that possess the characteristics or that have the knowledge of the phenomenon that is being studied (Asiaka, 1991). It also means the aggregate people from which the sample is to be drawn.
Population is sometimes referred to as the universe. The population of this research study will be Seventy-five (75) selected staffs of National pension commission of Kano state
ย CHAPTER FOUR
Advertisements
ย DATA PRESENTATION, ANALYSIS AND DISCUSSION
This chapter is about the analysis and presentation of data collected from the field through questionnaire. The analysis of the data with particular question immediately followed by the presentation of findings.
As mentioned in chapter three, 50 questionnaires were administered and 50 were retrieved and necessary analysis was carried out on them and presented as follows:
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain analysis of the factors that determine the choice of pension fund administrators in Kano state. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of factors that determine the choice of pension fund administrators
Summary
This study was on analysis of the factors that determine the choice of pension fund administrators in Kano state. Three objectives were raised which included: To find out the effect of political factor on the choice of pension fund administrator in Kano state, to find out the effect of environmental factor on the choice of pension fund administrator in Kano state and to find out the effect of risk factor on the choice of pension fund administrator in Kano state. The total population for the study is 75 staffs of national pension commission in Kano. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies
ย Conclusion
From ย the ย discussion ย of ย findings, ย it ย is ย clear ย that ย this research ย work ย has ย explored ย the ย importance ย of ย influence of ย factors ย on ย investment ย decisions ย in ย Nigerian ย PFAs. ย It has also demonstrated the extent to which economic, risk and other qualitative factors determine the choice of asset allocations of PFAs.The ย result ย of ย this ย research ย is ย also ย connected ย with a ย critical ย sector ย of ย Nigerian ย economy ย which ย needs ย a serious ย attention, ย therefore ย it ย is ย important ย to ย mention that ย this ย work ย would ย serve ย as ย an ย initial ย effort ย for ย further research ย in ย order ย to ย improve ย the ย development ย of ย a ย more comprehensive asset portfolio investment decision making by the PFA managers. The ย research ย concluded ย that ย if ย Pencom ย would ย be ย a bit ย flexible ย in ย its ย regulatory ย restriction ย of ย investment areas ย of ย PFAs, ย it ย would ย enhance ย a ย better ย investment decision ย making ย process. ย This ย will ย also ย go ย a ย long ย way in ย determining ย the ย competence ย of ย the ย PFA ย mangers ย with regards to investment management, which will eventually boost their competitiveness
Recommendation
PFAs ย need ย to ย come ย up ย with ย a ย favourable ย investment policy; ย on ย this, ย three ย components ย need ย to ย be ย considered. These ย include: ย Defining ย an ย acceptable ย level ย of ย risk tolerance; ย Setting ย parameters ย for ย short-term ย asset allocation; Setting parameters for long-term performance. PFAs ย should ย maintain ย a ย fair ย balance ย between ย returns on investment and the pension risks i.e. they should ensure that all investment decisions are made in the best interest of ย their ย contributors; ย diversification ย of ย investments, maturity matching etc. Pencom should ย continue ย to ย develop ย favourable investment ย and ย valuation ย guide ย lines, ย and ย to ย ensure compliance ย as ย well ย as ย taking ย prompt ย corrective ย actions where ย necessary. ย However, Pencom ย ย ย should ย allow ย fund managers ย some ย flexible ย on ย asset ย allocation ย so ย that ย they can ย create ย optimum ย portfolio ย mix ย and ย get ย rewarded ย for intelligent ย risk ย taking; ย as ย good ย as ย regulatory ย restrictions on ย asset ย allocation ย might ย be, ย it ย has ย the ย tendency ย of inhibiting ย growth ย as ย it ย prevents ย creativity ย and ย innovative thinking on the part of the fund manager
References
- Akinwale, O. S., & ย Abiola, O. R. (2007). A Conceptual Model of Asset ย ย ย Portfolio ย Decision ย Making: A ย Case ย Study ย in ย a Developing ย Economy. African Journal of Business and Management, 1(7).
- Amoo, ย B. A. ย G. ย (2008). ย Maximising ย the ย Impact ย of ย the ย New Pension ย Scheme ย in ย Nigeria: ย Issues, ย Prospects ย andย Challenges. CBN Bullion, 32(2).
- ย Andersen, J. V. (2008). Models of Investment Decision Making in ย Finance. ย In ย Encyclopaedia ย of ย Complexity ย and ย Systems Science. ย Retrieved ย from: ย http://arXiv.org/abs ย (12 ย March, 2011).
- ย Anthony, ย E., ย & ย Mustapha, ย I. ย (2010). ย Factor Analysis o f ย ย I n v e s t m e n t ย ย D e c i s i o n ย ย i n ย ย N i g e r i a n ย ย I n s u r a n c e ย ย ย ย ย ย ย ย ย ย Companies. Interdisciplinary Journal Of Contemporary Research In Business, 2(8).
- Banc ย Garanti ย Limited ย (BGL) ย (2010). ย Situating ย Nigeria ย in ย the Global Pension Industry.
- Black, ย F., ย & ย ย ย Scholes, ย M. ย (1973). ย The ย Pricing ย of ย Options ย and Corporate ย Liabilities. Journal of Political Economy, 81, 637-654.
- Child, D. (1970). The Essentials of Factor Analysis. New York: Holt, ย Rinehart ย and Winston. ย Retrieved ย from: ย www.books.google.com (12 March, 2011).
- French, ย S. ย (1986). Decision Theory: An Introduction to the Mathematics of Rationality. ย ย E l l i s ย ย H o r w o o d : ย ย ย ย ย ย ย ย ย ย Chichester.
- French, ย N, ย &. ย Gabrielli, ย L. ย (2005). Judgements, Forecasts and Decisions: An Analysis of Fund Managers over Time. Paper Presented at Ares 21st Annual Meeting, Santafe.
- Lintner, ย J. ย (1965). The Valuation ย of ย Risk Assets ย and ย the Selection ย of ย Risky ย Investments ย in ย Stock ย Portfolios ย and Capital ย Budgets. The Review of Economics and Statistics (The MIT Press), 47(1).
- Markowitz, ย H. ย (1959). Portfolio Selection: Efficient Diversification of Investments. ย New York: ย John Wiley ย and Sons.
