Evaluating the performance of pension funds A case study of Social Security and National Insurance Trust (Ssnit)
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 scheme‟s 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.
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,