133 Copyright © Canadian Research & Development Center of Sciences and Cultures ISSN 1923-841X[Print] ISSN 1923-8428[Online] www.cscanada.net www.cscanada.org analysis of Investment Decision by Nigerian Pension Fund administrators (PFas) TSADO, Emmanuel 1* ; GUNU, Umar 2 1 Department of Business Administration, Ibrahim Badamasi Babangida University, Lapai. Nigeria Email: nueltsado@yahoo.com 2 Ph.D. Department of Business Administration, University of Ilorin, Ilorin, Nigeria Email: gunu_umar_2002@yahoo.com * Corresponding author Address: Department of Business Administration, Ibrahim Badamasi Babangida University, Lapai. Nigeria. Email: nueltsado@yahoo.com Received 12 October 2011; Accepted 15 November 2011 Abstract Decisions taken by Pension Fund Administrators whether to invest in a particular asset class or not depend upon relative importance of different factors. The relative importance of these factors and the interactions among decisions taken by PFAs has remained unknown to the contributors. Therefore, this study is designed to examine factors affecting investment decision in PFAs. This research work examined the factors that influence investment decisions in Nigerian PFAs. The study also evaluated investment decisions in Nigerian PFAs based on both qualitative and quantitative factors. Primary data were used for this research, which were generated through the use of questionnaire. Simple random sampling technique was used to select respondents from ive PFAs in Nigeria. Data collected were analysed using factor analysis. The result of the study indicates that three factors were considered by PFA managers when making investment decisions: Economic, Risk and Security of real estate factors. The study concluded that National Pension Commission should be a bit flexible in its regulatory restriction of investment areas of PFAs to enhance a better investment decision making process. The study therefore, recommended that PFAs should use reward structure to ensure accountability of those that are in charge of investment decision making. Key words: Investment; Decision making; Pension Fund Administrator; Factor analysis; National pension commission TSADO, Emmanuel, & GUNU, Umar (2011). Analysis of Investment Decision by Nigerian Pension Fund Administrators (PFAs). International Business and Management, 3 (2), 133- 140. Available from: URL: http://www.cscanada.net/ index.php/ibm/article/view/j.ibm.1923842820110302.160 DOI: http://dx.doi.org/10.3968/ j.ibm.1923842820110302.160 INTRODUCTION Pension reforms have become an important part of public policy across the globe and Nigeria is not an exception. The old defined benefit (DB) schemes in which the government guarantees an agreed level of retirement beneits to civil servants lost favour due to demographic trends, unfunded future liabilities, higher fiscal deficits, and lower benefits for pensioners (Amoo, 2008). These factors prompted governments to gradually replace pay as you go (PAYG) schemes with either fully or partially funded pension schemes where risks are borne by contributors to the fund rather than by the government. Keeping in view the afore mentioned factors, the federal government of Nigeria introduced Pension Reforms Act (PRA) 2004, which is contributory, fully funded based on individual accounts that are privately managed by Pension Fund Administrators (PFAs). Thus, PFAs are financial institutions established solely for the purpose of accumulation of funds to meet future pension liabilities of the employees; they are charged with the responsibility of investing pension contributions to ensure a fair return. These contributions are very large, estimated at over N1 trillion in 2007 (Pencom, 2008). PFAs’ managers are therefore, decision makers, because their role is to decide upon asset allocations, sector by sector on a year-to-year basis to maximize International Business and Management Vol. 3, No. 2, 2011, pp. 133-140 DOI:10.3968/j.ibm.1923842820110302.160