Pension funds are employer-funded retirement plans managed by pension advisers who make investment decisions, ensure compliance with government regulations, and handle day-to-day operations. Pension consultants may determine how payments to the fund should be distributed and manage investments. They also ensure compliance with government regulations and manage requests from retired employees.
Pension funds differ from superannuation funds in that part or all of the money is provided by the employer rather than the individual. The employer maintains control of finances and makes investment decisions for the fund. Often, much of the fund’s administration is handed over to pension advisers. These advisors advise on financial investments, ensure retirees pay and monitor contributions received to the fund. In addition, they ensure that the fund operates in compliance with government regulations.
When establishing a new employee retirement fund, most organizations’ primary concern is the type of fund. This choice is particularly difficult as fully employer-funded pension plans are rare. These funds usually involve contributions from your employees’ actual salaries. Thus, pension consultants may be called upon to determine how the liability for payments to the fund should be distributed.
Once the fund is in place and regular contributions are being made, it becomes necessary to establish a fund portfolio. Some employers choose to manage investments using pension advisers primarily as actuaries. These advisors assess the risks of potential investments and report their findings to the fund manager. From time to time, there may be special actuarial licensing requirements for consultants acting in this capacity.
In other cases, the situation is largely reversed. These pension advisers are instructed to invest certain percentages of the fund in specific types of investments. Within these limits, consultants are given a fair amount of decision-making power. Such arrangements may be safeguarded by requiring the adviser to obtain approval from the fund owner for purchases above a certain amount.
Pension advisers often maintain the day-to-day operations of the pension fund. This can include accounting and tax compliance. Most companies require that pension information be included in their annual reports. It is usually the consultant’s responsibility to provide this information. Additionally, consulting firms may be responsible for managing requests from newly retired employees and arranging regular payments to these individuals.
Many governments have created rules and regulations that govern the operations of pension funds. These laws are designed to protect individuals from losing all or part of their retirement funds through mismanagement or misappropriation of funds. These laws vary by jurisdiction, but are generally quite complex. It is often the role of pension advisors to ensure that pension plans comply with these statutes.
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