The Determinant of Financial Performance of Pension Funds in Ghana. A Case Study on Social Security and National Insurance Trust

Abstract

Pension funds act as an important stimulus to capital markets in most countries where they exist through financial intermediation. Pension funds complement, and hence stimulate the development of capital markets while acting as substitutes for banks as they generate returns themselves. The returns they realize depend on different factors that vary from country to country and from time to time. The purpose of this study was to establish the determinants of the financial performance of the SSNIT pension fund.

The study used annual data from 2007 to 2016 on contribution inflow, age of contributor, number of active contributor and income from the investment. Time series and cross tab analysis were used to determine the relationship between ROA as the dependent variable and contribution inflow, age of contributor, number of active contributor and income from investment as the independent variables.

The study found that there was a correlation between the variables in the study through the results confirmed that there was multicollinearity between the variables themselves. The study results indicated that the asset value components could explain 97.72% of the variation in the active number of contributors. All the variables under consideration were positively and highly correlated. They all move in the same direction

The study recommends that pension funds use the increasing value of their funds to generate returns for pensioners to provide a good standard of living. Also, pensioner's contributions must be put to more productive investments rather than just keeping the funds safely for the pensioners