Capital budgeting decision making process in Social Security Fund: the case of National Social Security Fund

Capital budgeting (or investment appraisal) is the planning process used to determine whether a firms long term investments such as new machinery, replacement machinery, new plants, new products, and research and development projects are worth pursuing. Mainly formal methods include NPV, PI, IRR, MIRR and Equivalent annuity. The study offers some insight on how NSSF has managed capital budgeting decision making process. A total of 40 respondents were involved in data collection through questionnaires and interviews including top managers, middle managers and supervisors selected at random. The study examined capital budgeting decision making process in social security funds based on capital budgeting decision techniques. The findings spell out that NPV, IRR and PI are significant in whole process of capital budgeting as per NSSF. The study showed that NSSF did have an investment policy which it did follow, often evaluated their different investments, DCF techniques were more superior to conventional methods while conventional methods were more applicable as compared to DCF. Contribution level has a positive relationship to investment level while profit level had no significance to investment level. The findings imply that NSSF should adequately analyze capital budgeting techniques before making investment decisions censuring that they meet the expectations and perceptions of the members and the general public as this will help in satisfying them. This finding will not only help NSSF but also other social security funds.