Effect of Asset Investment Strategies (Federal Government Securities and Ordinary Shares of Public Liability Companies) and Financial Performance of Pension Fund Administrators (PFAs) In Nigeria

The Nigerian pension sector underwent a major overhaul after the enactment of the Pension Reform Act (PRA) of 2004. Effect Of Asset Investment Strategies (Federal Government Securities and Ordinary Shares of Public Liability Companies) and Financial Performance of Pension Fund Administrators (PFAs) In Nigeria. The period 2014–2023 is chosen to capture trends and impacts over a decade, accounting for regulatory reforms such as the 2014 Pension Reform Act and recent market dynamics. The study utilized ex- factor design, encompassing the ten-year period from 2014 to 2023. The population consist of all the 21 registered pension fund administrators (PFAs) in Nigeria. Based on the census sampling technique 14 companies met the criteria and were sampled for the study. The theory underpinning this study is capital accumulation, This study employed multiple regression analysis, where the dependent variable, representing the financial performance of Pension Fund Administrators (PFAs) (Y), is explained by multiple independent variables. Panel Ordinary Least Squares (OLS) is employed. The allocation of pension funds to federal government securities exerts a positive and statistically significant influence on Return on Equity (ROE). This relationship underscores the contribution of low-risk, government-backed instruments to the profitability of pension fund administrators by providing stable returns and mitigating portfolio volatility. The coefficient of 1.018585 indicates that, ceteris paribus, a one-unit increase in investment in these securities corresponds to a 1.018585-unit increase in ROE. This finding confirms the strategic value of federal government securities in enhancing returns, complying with regulatory guidelines, and fortifying the financial stability of pension institutions in Nigeria. The analysis reveals a positive and statistically significant relationship between investments in ordinary shares and Return on Equity (ROE), demonstrating that greater allocation to equities enhances the financial performance of pension fund administrators in Nigeria. This improvement in ROE reflects the superior return potential of equities relative to more conservative assets, derived from capital appreciation and dividend income. Notwithstanding the inherent risks associated with market volatility, the net effect on returns is favorable. Consequently, the strategic inclusion of ordinary shares within investment portfolios is advocated for optimizing long-term financial outcomes. Pension fund administrators in Nigeria are recommended to maintain and, where feasible, increase their allocation to federal government securities to ensure steady returns and preserve capital.