Those wishing to provide for their employees can also do so through a pension
fund. Pension funds are supervised by the official supervisory authority but are
not subject to the same restrictions on investment as insurance companies.
Most company funds are managed by insurance companies, banks and other
operators as a service. Contributions are tax deductible, but the company does
not have to show a future pension liability in its accounts.
Present and former employees with both funded and unfunded pension rights
are protected against employer bankruptcy by a government supported and
regulated Association for the Assurance of Pensions. Employers making pension
promises of all descriptions other than insurance policies taken out in the
name of the employee to benefit must join the Association and pay an annual
premium based on their total commitment.
The Association sets the rates to
cover its actual expenditure over the previous year; thus effectively, it spreads
the pension risk from employer bankruptcy over all contributing employers.