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A pension fund is which of these?
AA pool of premiums held against future insurance claims
BA pool of deposits held to meet withdrawals on demand
CA pool of money set aside to pay retirement benefits
DA pool of shares held for trading on behalf of clients
Answer & Solution
Correct answer: C. A pool of money set aside to pay retirement benefits
1. Pension funds are large pools of money set aside by corporations, unions and governments.
2. The money is set aside for later use in paying retirement benefits.
3. Those benefits go to the employees or members of the sponsoring organisation.
4. A pool of premiums against claims is an insurance reserve, which serves a different promise altogether.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.3 U.S. Financial Institutions_
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