Concept explainers
To determine: Difference among non-insured pension fund and insured pension fund.
Explanation of Solution
Generally, pension funds are managed by life insurance companies which are referred as insured pension fund.
The designation is due not essentially to the type of administrator. But to the division of assets in which the pension funds are invested. Especially, there is no individual pool of asset backing the pension plan. Instead these funds are investing in general asset accounts.
Non-insured pension plans are administered by a trust department of a financial institution which is appointed by the sponsoring participant, business, or union. Trustees use to invest the contributions and then makes payments of their retirement benefits in agreement with the terms of the pension fund.
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Chapter 18 Solutions
EBK FINANCIAL MARKETS AND INSTITUTIONS
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