Pension funds are investment funds established on purpose to generate income for retirement. They are very useful in economy when society gets older and number of population decreases, because a working class is getting harder to support growing number of pensioners. Pension funds help to get it more in balance.
Pension’s funds can be established by the employer and be proposed for the employees as a part of remuneration, which is very popular in USA. While in Europe more popular are pension funds that are part of a government retirement plan and have equal rules for all the citizens. Even if such pension funds are strictly regulated by government, they are created and managed by private investment management companies.
Pension funds may invest in different investments according to level of riskiness. Usually they are passively managed and have low management fees. However, pension funds have huge amount of capital under management over the world and have critical importance to the financial markets.
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