Pension Funds Investment and Human Capital Development in Nigeria

Abstract

The growth of an economy is limited by the quality of life of its inhabitants. This analogy applies to pension funds whose growth is also affected by the quality of life of the owners of such funds. This paper investigates the impact of the investment of pension funds on human capital development in Nigeria and by extension the attainment of the United Nations’ SDGs. Granger Causality and Ordinary Least Squares techniques were used to analyse data on the Human Development Index (HDI), annual pension savings (PEN_S), annual pension investment (PEN_I), growth of Real GDP per worker (GDPGR), Financial Development Index (FIN_DI), consumer price index (CPI), as well as access to renewable energy (Renewable), from 2003 to 2023. Findings indicate that the investment of pension funds though diversified, has no significant impact on human capital development. It was concluded that the current investment template of pension funds does not support the attainment of the SDGs towards attaining the Agenda 2030 of the United Nations. It therefore recommended a retirement postponement besides wage increases, and most importantly the tagging of a percentage of the investment of pension funds to education and healthcare to ensure a developed human capital for a decent retirement living and the attainment of the SDGs.

Keywords: Pension, Investment, Human Capital, Intermediate Ends, Education, Health,  SDGs, Clean Energy.

DOI: 10.7176/RJFA/15-9-04

Publication date: October 30th 2024