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What is a pension fund?

A pension fund refers to the pool of money accumulated from contributions made by individuals, employers, or both, which is then invested to generate returns over time. The pension fund is managed by the pension provider or a fund manager appointed by the provider. The purpose of the pension fund is to grow the invested capital and generate income, which will ultimately be used to provide retirement benefits to the pension policyholder.

Pension funds typically invest in a diversified portfolio of assets, such as stocks, bonds, property, and other financial instruments. The investments aim to achieve growth and income while managing risk based on the pension scheme’s objectives and risk appetite. The value of a pension fund can fluctuate based on the performance of the underlying investments.

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