Editing Pension fund (section)

== How pension funds invest their money ==
Pension funds can make investments into stocks, bond, real estate, and other assets. However, they have to be prudently managed compared to other types of funds due to their lower risk tolerance. For many years, they mainly invest into stable stocks and bond.<ref name="auto">{{Cite book |last=Kumar |first=B. Rajesh |url=https://www.worldcat.org/title/879582228 |title=Strategies of banks and other financial institutions: theories and cases |date=2014 |publisher=Academic Press |isbn=978-0-12-416997-5 |location=San Diego, CA |oclc=879582228}}</ref> In order to keep high returns, with changing market conditions, they started to invest into other assets.<ref>{{Cite web |title=Where Do Pension Funds Typically Invest? |url=https://www.investopedia.com/articles/credit-loans-mortgages/090116/what-do-pension-funds-typically-invest.asp |access-date=2024-04-28 |website=Investopedia |language=en}}</ref> As of 2023, many pension funds are moving away from managing active stock portfolios towards passive investment methods, focusing on index funds and exchange-traded funds (ETFs) that replicate market indices. Additionally, there's an increasing trend to diversify into alternative assets like commodities, high-yield bonds, hedge funds, and real estate. Newer investment tools for pension funds include asset-backed securities, such as those tied to student loans or credit card debt, which are used to boost returns. Investing in [[private equity]] is also rising in popularity; these are long-term investments in non-public companies, aimed at achieving substantial profits through eventual sales when these companies reach maturity. Furthermore, real estate investment trusts (REITs) are becoming a frequent choice for pension funds due to their passive investment approach in the real estate sector. Direct investments in commercial properties like office buildings, warehouses, and industrial parks are also prevalent.<ref>{{Cite web |date=2023 |title=Pension Fund |url=https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/pension-fund/ |access-date=2024-04-28 |website=Corporate Finance Institute |language=en-US}}</ref>

Many governments around the world have established public pension systems that are partially or fully funded by investments rather than relying solely on payroll taxes. This approach helps to ensure the long-term solvency of these pension programs. Some examples of governments that use pension fund investments are:

* Australia: The Australian Government's [[Future Fund]] was established in 2006 to help cover the government's superannuation (pension) liabilities. It invests in a range of asset classes, including equities, fixed income, and alternative investments, to grow the fund's assets over time.
* Canada: The Canada Pension Plan Investment Board (CPPIB) manages the investment of the Canada Pension Plan's assets. It invests in a diversified portfolio of stocks, bonds, real estate, and other assets to generate returns and secure the future of the public pension system.
* Norway: The Norwegian Government Pension Fund Global, also known as the Oil Fund, is one of the largest sovereign wealth funds in the world. It invests the surplus revenues from Norway's oil and gas industry to help finance the country's public pension system and other government expenses.
* Singapore: The Central Provident Fund (CPF) in Singapore is a compulsory social security savings plan that requires contributions from both employers and employees. The CPF board invests these funds to generate returns and ensure the long-term financial stability of the pension system.
* Sweden: The Swedish Pension System (Allmänna pensionssystemet) has a buffer fund, the AP Funds, that invests in various financial instruments to supplement the pay-as-you-go pension contributions and ensure the system's long-term sustainability.

These are just a few examples of governments that have adopted an investment-based approach to managing their public pension systems. By diversifying and growing their pension fund assets, these countries aim to mitigate the risks of running out of money in the future as their populations age.