Impact of Information Technology Investment on Financial Performance of Nigerian Pension Fund Administrators

The paper examined impact of information technology investment on the financial performance of Pension Fund Administrators (PFAs) in Nigeria using panel dataset over the period 2010 - 2025. The paper adopted a dynamic panel approach using System GMM to address endogeneity and dynamic effects. Findings revealed that IT investment has a negative and significant short-term effect on financial performance (β = -0.0151, p < 0.01), indicating that initial technology costs may reduce profitability. Digitalization displayed a positive but weakly significant effect (β = 0.0493, p < 0.10), suggesting that digital transformation yields gradual financial gains. Firm size had a strong positive effect (β = 0.5068, p < 0.01), while interest rate also positively influenced performance. The model demonstrated robust explanatory power (R² = 0.97). The paper concludes that while IT investment imposes short-term costs, sustained digitalization and scale expansion are crucial for long-term PFA profitability. The paper recommends that PFAs should adopt long-term IT investment strategies, improve the use of digital platforms, and pursue scale efficiencies. Regulators should foster a supportive environment for technological innovation in the pension sector.

Information technology investment, digitalization, financial performance, pension fund administrators, fixed effects model

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