What is a Pension Fund?
Pension Funds are the funds contributed by employees, employers or both. The fund is contributed over a period of time to create a corpus for one’s retirement. The amount may be withdrawn in a lump sum or it may be availed monthly like pension.
How they are invested?
Pension funds are invested by professionals and regulated by Pension Fund Regulatory and Development Authority (PFRDA). The investors can be convinced that their funds are in able hands as the Fund managers has to comply with a number of rules and regulations while investing the funds of the investors. The mode of investment is similar to that of mutual funds. The funds are allocated to different funds equity, debt, securities, etc based on the age and risk appetite of the investor.
Benefits
Compulsive saving: It ensures that you save a fixed amount amount every month, and not just what you manage to save.
Professionally managed : It gives your investment a professional touch as you may not have that knowledge or time to manage the fund
Volume : As a pool of fund is created, it becomes possible to invest in a variety of funds, which may not have been possible if managed individually.
