Pension fund
Encyclopedia
A pension fund is any plan, fund, or scheme which provides retirement income.
Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investor
s dominate. The largest 300 pension funds collectively hold about $6 trillion in assets. In January 2008, The Economist
reported that Morgan Stanley
estimates that pension funds worldwide hold over US$20 trillion in assets, the largest for any category of investor ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or private equity
.
Although the (Japan) Government Pension Investment Fund (GPIF) lost 0.25 percent, in the year ended March 31, 2011 GPIF was still the world's largest public pension fund which oversees 114 trillion Yen ($1.5 trillion).
Closed pension funds are further subclassified into:
in others, the distinction is made sharply in law, with very specific requirements for administration and investment. For example, local governmental bodies in the United States are subject to laws passed by the states in which those localities exist, and these laws include provisions such as defining classes of permitted investments and a minimum municipal obligation
.
Netherlands
Norway
United States
In the United States pension funds include schemes which result in a deferral of income by employees, even if retirement income provision isn't the intent. The United States has more than $9.838 trillion in assets as of March 31, 2010. The largest 200 pension funds accounted for $4.540 trillion as of September 30, 2009.
Social Security Institution was established by the Social Security Institution Law No:5502 which was published in the Official Gazette No: 26173 dated 20.06.2006 and brings the Social Insurance Institution, General Directorate of Bağ-kur and General Directorate of Emekli Sandığı whose historical development are summarized above under a single roof in order to transfer five different retirement regimes which are civil servants, contractual paid workers, agricultural paid workers, self-employers and agricultural self-employers into a single retirement regime that will offer equal actuarial rights and obligations. The Social Security Institution is continuing its activities to provide better quality of services for our citizens with the participation of whole staff putting all their energy individually and institutionally.
OYAK, (Ordu Yardımlaşma Kurumu/Armed Forces Pension Fund) provides its members with "supplementary retirement benefits" apart from the official retirement fund, T.C.Emekli Sandığı/SSK, to which they are primarily affiliated.
In addition to the retirement benefit, OYAK pays "disability benefits" to the members on duty when they become partially or fully disabled as well as "death benefits" to the heirs of the deceased member if the death occurs during the member's subscription to the Foundation.
OYAK is incorporated as a private entity under its own law subject to Turkish civic and commercial codes. OYAK while fulfilling its legal duties, as set in the Law, also provides its members with social services such as loans, home loans and retirement income systems.
The initial source of OYAK's funds is a compulsory 10 percent levy on the base salary of Turkey's 200,000 serving officers who, together with 25,000 current pensioners, make up OYAK's members.
Some other Turkish Private ppension fund organization;
|-
| width="90%"|
{| class="wikitable sortable" style="font-size:98%;" align="center"
|-
! Country
! Fund
! Assets US$ (in billions)
! Inception
! Origin
! width=100|Approx wealth per citizen
|-valign=top
| || Government Pension Fund of Norway || $560 || 1990 || Oil || align="right"|91,000
|-valign=top
||| Government Pension Investment Fund|| $1370 || 2006 || Non-commodity || align="right"|10,800
|-valign=top
||| Stichting Pensioenfonds ABP
(ABP) || $313 (€215) || 1922 || Non-commodity || align="right"|N/A
|-valign=top
||| National Pension Service
(NPS) || $270 || 1988 || Non-commodity || align="right"|5,000
|-valign=top
| (Quebec
)|| Caisse de dépôt et placement du Québec
(The Caisse, or CDPQ) || $199 || 1965 || Non-commodity || align="right"|N/A
|-valign=top
| (California
) || California Public Employees' Retirement System (CalPERS)
|| $202 || 1932 || Non-commodity || align="right"|126,250
|-valign=top
| || Employees Provident Fund
|| $130 || 1991 || Non-commodity || align="right"|4,500
|-valign=top
||| Stichting Pensioenfonds Zorg en Welzijn
(PFZW, formerly PGGM) || $123 (€85) || 1969 || Non-commodity || align="right"|N/A
|-valign=top
| || CPP Investment Board
(Canada Pension Plan) || $122.7 || 1997 || Non-commodity || align="right"|3,500
|-valign=top
| (Ontario
) || Ontario Teachers' Pension Plan
|| $109 || 1990 || Non-commodity || align="right"|N/A
|-valign=top
| || Caixa de Previdencia dos Funcionários do Banco do Brasil (PREVI) || $80 || 1904 || Finance || align="right"|N/A
|-valign=top
| || National Pension Reserve Fund (NPRF) || $30 || 2001 || Non-commodity || align="right"|N/A
|-valign=top
|}
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
s dominate. The largest 300 pension funds collectively hold about $6 trillion in assets. In January 2008, The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
reported that Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
estimates that pension funds worldwide hold over US$20 trillion in assets, the largest for any category of investor ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
.
Although the (Japan) Government Pension Investment Fund (GPIF) lost 0.25 percent, in the year ended March 31, 2011 GPIF was still the world's largest public pension fund which oversees 114 trillion Yen ($1.5 trillion).
Open vs. closed pension funds
Open pension funds support at least one pension plan with no restriction on membership while closed pension funds support only pension plans that are limited to certain employees.Closed pension funds are further subclassified into:
- Single employer pension funds
- Multi-employer pension funds
- Related member pension funds
- Individual pension funds
Public vs. private pension funds
A public pension fund is one that is regulated under public sector law while a private pension fund is regulated under private sector law. In certain countries the distinction between public or government pension funds and private pension funds may be difficult to assess.in others, the distinction is made sharply in law, with very specific requirements for administration and investment. For example, local governmental bodies in the United States are subject to laws passed by the states in which those localities exist, and these laws include provisions such as defining classes of permitted investments and a minimum municipal obligation
Minimum Municipal Obligation
Minimum Municipal Obligation is, in the United States, the state-mandated smallest amount a municipality must contribute to any pension plan established for its employees....
.
Government
- Public Sector Superannuation Scheme (for federalGovernment of AustraliaThe Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
civil servants) - Commonwealth Superannuation Scheme (older scheme for federal civil servants)
- State Super (for New South WalesNew South WalesNew South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
stateStates and territories of AustraliaThe Commonwealth of Australia is a union of six states and various territories. The Australian mainland is made up of five states and three territories, with the sixth state of Tasmania being made up of islands. In addition there are six island territories, known as external territories, and a...
civil servants)
Private
- The Retail Employees Superannuation TrustRetail Employees Superannuation Trust (REST)REST is an industry superannuation fund established in 1988. With over 1.9 million members, REST is Australia’s largest superannuation fund by membership. Originally set up to cater for workers within the retail industry, REST now accepts members from all occupations and industries...
- ANZ Australian Staff Superannuation Scheme (for employees of ANZ BankANZ BankThe Australia and New Zealand Banking Group Limited , commonly called ANZ, is the fourth largest bank in Australia, after the Commonwealth Bank, Westpac Banking Corporation and the National Australia Bank. Australian operations make up the largest part of ANZ's business, with commercial and retail...
)
Government
- Caisse de dépôt et placement du QuébecCaisse de dépôt et placement du QuébecThe Caisse de dépôt et placement du Québec manages public pension plans in the Canadian province of Quebec. It was founded in 1965 by an act of the National Assembly...
- Canada Pension Plan Investment Board
- Public Sector Pension Investment Board (PSP Investments)
- Alberta Investment ManagementAlberta Investment ManagementAlberta Investment Management Corporation is one of Canada's largest institutional investment fund managers. It is headquartered in Edmonton, Alberta....
Private
- Ontario Teachers' Pension PlanOntario Teachers' Pension PlanThe Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of the Canadian province of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment...
(union-controlled) - Healthcare of Ontario Pension Plan (HOOPP)
- OMERS Administration Corporation (OMERS)
- Ontario Pension Board (OPB)
Malaysia
- Employees Provident FundEmployees Provident FundThe Employees Provident Fund also known Malay as Kumpulan Wang Simpanan Pekerja is a Malaysian government agency under the Ministry of Finance. It manages the compulsory savings plan and retirement planning for legally employed workers in Malaysia...
(Malaysia's largest, total assets of around RM407 billion in diversified portfolio)
NetherlandsNetherlandsThe Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
- Stichting Pensioenfonds ABPStichting Pensioenfonds ABPStichting Pensioenfonds ABP , frequently referred to as ABP, is the pension fund for government and education employees in the Netherlands...
(ABP) - Stichting Pensioenfonds Zorg en WelzijnStichting Pensioenfonds Zorg en WelzijnStichting Pensioenfonds Zorg en Welzijn is the second largest pension fund in the Netherlands...
(PFZW, formerly PGGM)
NorwayNorwayNorway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
- The Government Pension Fund - Global (Statens pensjonsfond - Utland)
- The Government Pension Fund - Norway (Statens pensjonsfond - Norge)
United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
In the United States pension funds include schemes which result in a deferral of income by employees, even if retirement income provision isn't the intent. The United States has more than $9.838 trillion in assets as of March 31, 2010. The largest 200 pension funds accounted for $4.540 trillion as of September 30, 2009.Government
- California Public Employees' Retirement System (CalPERS)CalPERSThe California Public Employees' Retirement System or CalPERS is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families"...
- California State Teachers' Retirement System (CalSTRS)CalSTRSThe California State Teachers' Retirement System provides retirement, disability and survivor benefits for California's 852,316 prekindergarten through community college educators and their families...
- Federal Retirement Thrift Investment BoardFederal Retirement Thrift Investment BoardThe Federal Retirement Thrift Investment Board was established as an independent agency of the United States government by the Federal Employees Retirement System Act of 1986. It is one of the smaller executive branch agencies, with just over 80 employees...
- Fire and Police Pension Association of Colorado (FPPA)
- Illinois Municipal Retirement FundIllinois Municipal Retirement FundThe Illinois Municipal Retirement Fund is a pension fund created in 1939 by the Illinois General Assembly for municipal employees in the state of Illinois. IMRF began operating in 1941 with 5 original employers and $5,000 in assets...
- Kansas City Public School Retirement System (KCPSRS)
- Kansas Public Employees Retirement System (KPERS)
- Minnesota Public Employees' Retirement Association (MNPERA)
- Minnesota Teachers' Retirement Association (MNTRA)
- New York State Teachers' Retirement System (NYSTRS)
- Retirement Systems of AlabamaRetirement Systems of AlabamaRetirement Systems of Alabama is the administrator of the pension fund for employees of the state of Alabama. It is headquartered in Montgomery, Alabama. David G. Bronner is the chief executive officer....
- Teacher Retirement System of TexasTeacher Retirement System of TexasTeacher Retirement System of Texas is a public pension plan of the State of Texas. Established more than 70 years ago, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas and manages a more than $107...
(TRS of Texas)
Private
- TAPILTAT, the Fund for Mutual Assistance of the Employees of Ioniki Bank and Other Banks, the multi-employer auxiliary pension fund.
Government
- Social Security Institution SGK Sosyal Güvenlik Kurumu (SGK)
Social Security Institution was established by the Social Security Institution Law No:5502 which was published in the Official Gazette No: 26173 dated 20.06.2006 and brings the Social Insurance Institution, General Directorate of Bağ-kur and General Directorate of Emekli Sandığı whose historical development are summarized above under a single roof in order to transfer five different retirement regimes which are civil servants, contractual paid workers, agricultural paid workers, self-employers and agricultural self-employers into a single retirement regime that will offer equal actuarial rights and obligations. The Social Security Institution is continuing its activities to provide better quality of services for our citizens with the participation of whole staff putting all their energy individually and institutionally.
Private
OYAK, (Ordu Yardımlaşma Kurumu/Armed Forces Pension Fund) provides its members with "supplementary retirement benefits" apart from the official retirement fund, T.C.Emekli Sandığı/SSK, to which they are primarily affiliated.
In addition to the retirement benefit, OYAK pays "disability benefits" to the members on duty when they become partially or fully disabled as well as "death benefits" to the heirs of the deceased member if the death occurs during the member's subscription to the Foundation.
OYAK is incorporated as a private entity under its own law subject to Turkish civic and commercial codes. OYAK while fulfilling its legal duties, as set in the Law, also provides its members with social services such as loans, home loans and retirement income systems.
The initial source of OYAK's funds is a compulsory 10 percent levy on the base salary of Turkey's 200,000 serving officers who, together with 25,000 current pensioners, make up OYAK's members.
Some other Turkish Private ppension fund organization;
- YAPI ve KREDİ BANKASI A.Ş. Mensupları Yardım ve Emekli Sandığı Vakfı
- AKBANK T.A.Ş. Mensupları Tekaüt Sandığı Vakfı
- TÜRKİYE GARANTİ BANKASI A.Ş. Memur ve Müstahdemleri Emekli ve Yardım Sandığı Vakfı
- TÜRKİYE ODALAR BORSALAR VE BİRLİK PERSONELİ SİGORTA VE EMEKLİ SANDIĞI VAKFI
- TÜRKİYE İŞ BANKASI A.Ş. Mensupları Emekli Sandığı Vakfı
Largest pension funds
{||-
| width="90%"|
{| class="wikitable sortable" style="font-size:98%;" align="center"
|-
! Country
! Fund
! Assets US$ (in billions)
! Inception
! Origin
! width=100|Approx wealth per citizen
|-valign=top
| || Government Pension Fund of Norway || $560 || 1990 || Oil || align="right"|91,000
|-valign=top
||| Government Pension Investment Fund|| $1370 || 2006 || Non-commodity || align="right"|10,800
|-valign=top
||| Stichting Pensioenfonds ABP
Stichting Pensioenfonds ABP
Stichting Pensioenfonds ABP , frequently referred to as ABP, is the pension fund for government and education employees in the Netherlands...
(ABP) || $313 (€215) || 1922 || Non-commodity || align="right"|N/A
|-valign=top
||| National Pension Service
National Pension Service
The National Pension Service of Korea is a public pension fund for South Korea. It is the fourth largest in the world with $300 billion in assets is the largest investor in South Korea.-Activities:...
(NPS) || $270 || 1988 || Non-commodity || align="right"|5,000
|-valign=top
| (Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
)|| Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
The Caisse de dépôt et placement du Québec manages public pension plans in the Canadian province of Quebec. It was founded in 1965 by an act of the National Assembly...
(The Caisse, or CDPQ) || $199 || 1965 || Non-commodity || align="right"|N/A
|-valign=top
| (California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
) || California Public Employees' Retirement System (CalPERS)
CalPERS
The California Public Employees' Retirement System or CalPERS is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families"...
|| $202 || 1932 || Non-commodity || align="right"|126,250
|-valign=top
| || Employees Provident Fund
Employees Provident Fund
The Employees Provident Fund also known Malay as Kumpulan Wang Simpanan Pekerja is a Malaysian government agency under the Ministry of Finance. It manages the compulsory savings plan and retirement planning for legally employed workers in Malaysia...
|| $130 || 1991 || Non-commodity || align="right"|4,500
|-valign=top
||| Stichting Pensioenfonds Zorg en Welzijn
Stichting Pensioenfonds Zorg en Welzijn
Stichting Pensioenfonds Zorg en Welzijn is the second largest pension fund in the Netherlands...
(PFZW, formerly PGGM) || $123 (€85) || 1969 || Non-commodity || align="right"|N/A
|-valign=top
| || CPP Investment Board
CPP Investment Board
Under the direction of the then Canadian Finance Minister Paul Martin, the CPP Investment Board was created in 1997 as an organization independent of the government to monitor and invest the funds held by the Canada Pension Plan . In turn, the CPP Investment Board created the CPP Reserve Fund. The...
(Canada Pension Plan) || $122.7 || 1997 || Non-commodity || align="right"|3,500
|-valign=top
| (Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
) || Ontario Teachers' Pension Plan
Ontario Teachers' Pension Plan
The Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of the Canadian province of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment...
|| $109 || 1990 || Non-commodity || align="right"|N/A
|-valign=top
| || Caixa de Previdencia dos Funcionários do Banco do Brasil (PREVI) || $80 || 1904 || Finance || align="right"|N/A
|-valign=top
| || National Pension Reserve Fund (NPRF) || $30 || 2001 || Non-commodity || align="right"|N/A
|-valign=top
|}
See also
- Pension regulationPension regulationPension regulation is a legal term encompassing the set of laws, rules and authoritative standards governing the pension industry, and the procedures needed to enforce them....
- Global assets under managementGlobal assets under managementGlobal asset allocation or Global assets under management consists of pension funds, insurance companies and mutual funds. Other funds under management include private wealth and alternative assets such as hedge funds and private equity...
- Pension insurance contractPension insurance contractPension insurance contract is an insurance contract that specifies pension plan contributions to an insurance undertaking in exchange for which the pension plan benefits will be paid when the members reach a specified retirement age or on earlier exit of members from the plan....
- Sovereign wealth fundSovereign wealth fundA sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
- Qualifying registered overseas pension schemesQualifying registered overseas pension schemesA Qualifying Recognised Overseas Pension Scheme or QROPS is an overseas pension scheme that meets certain requirements in order that it can be recognised by Her Majesty's Revenue and Customs...