A pension fund is a fund to which the employee and employer contribute for the ultimate financial benefit of the member and/or his or her beneficiaries in the case of withdrawal, disability, retirement, retrenchment or death.
A pension fund can either be Insured or Self–Administered
Advantages of a pension fund to the employer:
- Rewards for long service: To retain existing, efficient staff by offering long term security continuing beyond retirement.
- Attractive employment conditions: To attract new staff by offering fringe benefits in addition to remuneration.
- Business image in the labor market: To establish a reputation of being an employer who provides fitting rewards for employees who give long and loyal service and for those who die or are disabled in his services. Such a public image attracts applications for employment and enables the employer to select superior personnel.
- Insurance: To provide for the spouse/children of employees who die or become disabled in service, thereby avoiding possible legal or moral claims against the business.
- Staff loyalty, morale and security: To enhance the sense of well being and of belonging amongst staff thereby increasing their job satisfaction and productivity.