Pension Fund

A pension fund is a pool of assets specifically set aside to pay retirement benefits to employees. These funds are managed by investment professionals who aim to grow the fund’s assets through investments in stocks, bonds, real estate, and other financial instruments. Pension funds are critical to ensuring that employers can meet their obligations to retirees. They can be defined benefit funds, guaranteeing a specific payout, or defined contribution funds, where payouts depend on investment returns.

Example

A public sector pension fund invests in a diversified portfolio of stocks and bonds to ensure it can meet future pension payments for retired government employees.