Pension Fund



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A pension fund is a company-sponsored fund that provides income for employees in retirement.

Pension funds are the largest institutional investors in many nations. Institutional investors are groups with large amounts of capital to invest.

Employers usually invest fixed contributions into a pension fund account, tax deferred, over a long period of time. Employees access it through withdrawals when they retire.

A financial intermediary manages pension funds for many companies.

There are two kinds of pension funds: defined contribution plans and defined benefit plans. In a defined contribution plan, investment performance determines the payout. In a defined benefit plan, payouts are set regardless of investment performance, and the company must make up the difference if their funds’ investments perform poorly.

Pension funds have become increasingly scarce in the United States’ private sector in recent decades. Many of them collapsed in the 1990s, and they remain difficult to fund today, even with their tax benefits.

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