History of Pension Funds

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History of Pension Funds

In tradition, welfare of the elderly was the role of the family unit.

However, during the twentieth Century the population began to grow in

the UK and USA and the “elderly became a serious problem that only the

apparatus of the state was able to help” [1] Problems raised when the

state was no longer able to provide support to the elderly due the

elderly becoming older, improvements with medicine, improvements in

general standards of living and so on, which led to the role of

financial institutions. I.e. the creation of pension funds which has

now become one of the largest financial institutions in the USA and

UK.

Information about Pension Funds

Pension plans an “agreement by a sponsor to provide income to

participants upon their retirement.”[2] This is where it uses pension

funds as the financial intermediary to manage the assets and pays the

benefits of a pension plan. Pension funds are typically sponsored by

employers whereby Meir Kohn[3] had looked at an important question:

“Why do workers and firms find it beneficial to enter into this sort

of arrangements?” they have suggested that the employers acts as

financial intermediaries because a firm using a pension plan can use

it as an incentive device as “the pension acts as a performance bond

posted by the worker.” Therefore, it gives the employees the

motivation to work hard and to not quit the job and move on to the

next so easily. As moving to a new job would result in losing what

they have already saved up. An advantage for the firm is that it gives

the “firm a reputation for taking care of its employees” and so the

firm would “find it easier...

... middle of paper ...

...oundations of Financial Markets and Institutions,

p. 159

[7] www.ibm.com/annualreport2002

[8] Fabozzi et al, Foundations of Financial Markets and Institutions,

p. 16

[9] Fabozzi et al, Foundations of Financial Markets and Institutions,

p. 17

[10] Howells & Bain, Financial Markets and Institutions, p. 11

[11] http://www.bbk.ac.uk

[12] taken from www.ft.com

[13] Financial times article (1)

[14] Financial times article (1)

[15] taken from ADDRESS?????

[16] Financial times article (2)

[17] Financial times article (3)

[18] Financial times article (4)

[19] Financial times article (5)

[20] interview taken from

http://bernie.house.gov/documents/articles/20030910193639.asp

[21] Financial times article (6)

[22] Financial times article (6)

[23] appendix 1 and 2

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