Evaluating the performance of pension funds A case study of Social Security and National Insurance Trust (Ssnit)
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Date
August, 2015
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Abstract
The Social Security and National Insurance Trust (SSNIT) has a primary responsibility to
collect contributions to pay pensions and other benefits as they fall due. In fulfilling this
responsibility, the funds collected are invested to generate additional income to add to the
contributions of members. However, in recent times concerns have been raised on the
schemeās low investment returns. This research sought to evaluate the performance of SSNIT
investments returns from 2004 to 2013. The Evaluative research design was adopted in this
research and the results showed that the returns on SSNIT investment were generally below
the general market returns (Ghana Stock Exchange) on absolute basis. The effect of inflation
on the returns of the fund was significant with the fund recording negative real return in some
years. It was also found that inadequate investment expertise at SSNIT may have contributed to
the low returns recorded by the organization. However, further measure of performance on
risk-adjusted basis using the three widely used indexes (Jensen alpha, Sharpe ratio and
Treynor index) revealed that, SSNIT portfolio manager outperformed the market. Again,
SSNIT portfolio was found to be less risky than the market. It was also found that Investment
Monitoring Capacity, Industry and regulatory challenges, Currency risks, Silence of the
pension law on foreign investments, Political interference and others are some of the
challenges encountered in the investment of SSNIT funds.
Description
Thesis submitted to the School of Business, Kwame Nkrumah University of Science and Technology in partial fulfillment of The requirements for the degree of Master of Business
Administration in Finance,