EFFECT OF RISK MANAGEMENT ON INVESTMENT STRATEGY AND CONTRIBUTORY PENSION SCHEME SUSTAINABILITY NEXUS IN NIGERIA

Olanrewaju Atanda ALIU, Mudathir Olanrewaju SALAM, Adeshola Nurudeen HALIRU, Abubakar Sadiq KASUM

Abstract

In line with the increasing desire for sustainability across numerous areas of study, occupational pension sustainability has emerged among the core objectives of pension reforms. Thus, this study assesses the impact of risk management on the relationship between investment strategy and sustainability of contributory pension scheme (CPS) in Nigeria. Using data obtained from survey of 197 managers and assistant managers of pension fund administrators that manage CPS fund in Nigeria, the study employs partial least square structural equation modelling to examine the effects of investment strategy and risk management on sustainability of CPS. The study further examines the moderating effect of risk management on the relationship investment strategy and contributory pension scheme sustainability. Findings reveal that investment strategy and risk management have significant positive effects on the sustainability of CPS in Nigeria. Further analyses show that risk management has negative moderating effect on the relationship between investment strategy and the sustainability of CPS. The implications of the findings to management practices of the Nigerian CPS were presented among which we recommend that pension fund administrators need to strike a balance between their investment strategy and risk management decisions. This would improve their liquidity, reduce the risks to the minimum and facilitate the sustainability of the pension fund entrusted in their management.  

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