2010

A Project
On
Insurance And
Pension

By Kuldeep
PGDM IInd Semester,
Acharya Institute of Management & Sciences
 Acknowledgement
Apart from the efforts of mine, the success of
this project depends largely on the encouragement
and guidelines of many others. I take this opportunity
to express my gratitude to the people who have been
instrumental in the successful completion of this
project.

I would like to show my greatest appreciation to

Mrs. Mandrita Mukherjee. I can’t say thank you
enough for his tremendous support and help. I feel
motivated and encouraged every time I attend his
meeting. Without his encouragement and guidance
this project would not have materialized.

__________________ ____________
 Mandrita Mukherjee Kuldeep
(Project Guide)

Declaration

This project completely is the fruit of my own

research. I took help from many respected people. But
the final presentation of data and explanations, which
is mentioned all over the project report, is completely

(KULDEEP)
 Contents
Sl.No Particulars Page No.
1. Introduction
 Project Title
 Objective
2. Insurance
 Meaning of Insurance
 History of insurance
3. Types of insurance
4. Law of insurance
5. IRDA
 Duties ,power and function
6. Insurance company in India
7. Meaning of Pension

8. Types of pension fund

9. Advantages of Pension Fund

10. Pension company in India

11. Conclusion

INTRODUCTION
PROJECT TITLE-:
“INSURANCE AND PENSION FUND“

OBJECTIVE-:

 To know about the investment style.

 To know about the insurance sector.

 To know about the benefits of insurance.

 To know about the companies of insurance sector.

 To know about the pension plan in India.

 To know about the pension law.

INSURANCE
MEANING-:
Insurance provides financial protection against a loss arising out of happening of an uncertain
event. A person can avail this protection by paying premium to an insurance company. 

A pool is created through contributions made by persons seeking to protect themselves from
common risk. Premium is collected by insurance companies which also act as trustee to the pool.
Any loss to the insured in case of happening of an uncertain event is paid out of this pool.

Insurance works on the basic principle of risk-sharing. A great advantage of insurance is that it
spreads the risk of a few people over a large group of people exposed to risk of similar type.

DEFINITION-:

A promise of compensation for specific potential future losses in exchange for a

periodic payment. Insurance is designed to protect the financial well-being of
an individual, company or other entity in the case of unexpected loss. Some forms of insurance
are required by law, while others are optional. Agreeing to the terms of an insurance
policy creates a contract between the insured and the insurer. In exchange for payments from the
insured (called premiums), the insurer agrees to pay the policyholder a sum of money upon the
occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the
deductible), and the insurer pays the rest. Examples include car insurance, health
insurance, disability insurance, life insurance, and business insurance. 

HISTORY OF INSURANCE-:
China and Babylon was the first country who introduced the insurance. Chinese merchants
travelling treacherous river rapids would redistribute their wares across many vessels to limit the
loss due to any single vessel's capsizing. The Babylonians developed a system which was
recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Mediterranean
sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an
additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be
stolen or lost at sea.

Achaemenian monarchs of Ancient Persia were the first to insure their people and made it
official by registering the insuring process in governmental notary offices. The insurance
tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of
different ethnic groups as well as others willing to take part, presented gifts to the monarch. The
most important gift was presented during a special ceremony. When a gift was worth more than
10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was
advantageous to those who presented such special gifts. For others, the presents were fairly
assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the
court was in trouble, the monarch and the court would help him. Jahez, a historian and writer,
writes in one of his books on ancient Iran: Whenever the owner of the present is in trouble or
wants to construct a building, set up a feast, have his children married, etc. the one in charge of
this in the court would check the registration. If the registered amount exceeded 10,000 Derrik,
he or she would receive an amount of twice as much. A thousand years later, the inhabitants of
Rhodes invented the concept of the 'general average'. Merchants whose goods were being
shipped together would pay a proportionally divided premium which would be used to reimburse
any merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they
organized guilds called "benevolent societies" which cared for the families and paid funeral
expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The
Talmud deals with several aspects of insuring goods. Before insurance was established in the late
17th century, "friendly societies" existed in England, in which people donated amounts of money
to a general sum that could be used for emergencies.

Separate insurance contracts were invented in Genoa in the 14th century, as were insurance pools
backed by pledges of landed estates. These new insurance contracts allowed insurance to be
separated from investment, a separation of roles that first proved useful in marine insurance.
Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties
developed.

Some forms of insurance had developed in London by the early decades of the seventeenth
century. For example, the will of the English colonist Robert Hayman mentions two "policies of
insurance" taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of £100
each, one relates to the safe arrival of Hayman's ship in Guyana and the other is in regard to "one
hundred pounds assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed
and sealed on 17 November 1628 but not proved until 1633.[12] Toward the end of the
seventeenth century, London's growing importance as a centre for trade increased demand for
marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular
haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest
shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and
those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market
(note that it is not an insurance company) for marine and other specialist types of insurance, but
it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666
devoured more than 13,000 houses. The devastating effects of the fire converted the
development of insurance "from a matter of convenience into one of urgency, a change of
opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his
new plan for London in 1667."[13] A number of attempted fire insurance schemes came to
nothing, but in 1681 Nicholas Barbon, and eleven associates, established England's first fire
insurance company, the 'Insurance Office for Houses', at the back of the Royal Exchange.
Initially, 5,000 homes were insured by Barbon's Insurance Office.[14]

The first insurance company in the United States underwrote fire insurance and was formed in
Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to
popularize and make standard the practice of insurance, particularly against fire in the form of
perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of
Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it refused to insure
certain buildings where the risk of fire was too great, such as all wooden houses. In the United
States, regulation of the insurance industry is highly Balkanized, with primary responsibility
assumed by individual state insurance departments. Whereas insurance markets have become
centralized nationally and internationally, state insurance commissioners operate individually,
though at times in concert through a national insurance commissioners' organization. In recent
years, some have called for a dual state and federal regulatory system (commonly referred to as
the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and
national banks.

HISTORY OF INDIAN INSURANCE SECTOR-:

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk
in terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient
Indian history has preserved the earliest traces of insurance in the form of marine trade loans and
carriers’ contracts. Insurance in India has evolved over time heavily drawing from other
countries, England in particular.
 
   1818 saw the advent of life insurance business in India with the establishment of the Oriental
Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the
Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870
saw the enactment of the British Insurance Act and in the last three decades of the nineteenth
century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in
the Bombay Residency. This era, however, was dominated by foreign insurance offices which
did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and
London Globe Insurance and the Indian offices were up for hard competition from the foreign
companies.
 
     In 1914, the Government of India started publishing returns of Insurance Companies in India.
The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life
business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to
collect statistical information about both life and non-life business transacted in India by Indian
and foreign insurers including provident insurance societies. In 1938, with a view to protecting
the interest of the Insurance public, the earlier legislation was consolidated and amended by the
Insurance Act, 1938 with comprehensive provisions for effective control over the activities of
insurers.
 
   The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a
large number of insurance companies and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to nationalize
insurance business.
 
      An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and
Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian,
16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
 
     The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a
legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian
Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of
general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of
India. The General Insurance Council framed a code of conduct for ensuring fair conduct and
sound business practices.
 
    In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.
 
    In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company Ltd., the
New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India
Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a
company in 1971 and it commence business on January 1sst 1973.
 
     This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last decade
and more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations
for reforms in the insurance sector. The objective was to complement the reforms initiated in the
financial sector. The committee submitted its report in 1994 wherein , among other things, it
recommended that the private sector be permitted to enter the insurance industry. They stated
that foreign companies be allowed to enter by floating Indian companies, preferably a joint
venture with Indian partners.
 
     Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in
April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance
customer satisfaction through increased consumer choice and lower premiums, while ensuring
the financial security of the insurance market.
 
     The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders’ interests.
 
    In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. 
Today there are 14 general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 14 life insurance companies operating in the country. The insurance
sector is a colossal one and is growing at a speedy rate of 15-20%. GDP. A well-developed and
evolved insurance sector is a boon for economic development as it provides long- term funds for
infrastructure development at the same time strengthening the risk taking ability of the country.

TYPES OF INSURANCE

 Automobile insurance, also known as auto insurance, car insurance and in the
UK as motor insurance, is probably the most common form of insurance and may cover
 both legal liability claims against the driver and loss of or damage to the vehicle itself.
Over most of the United States purchasing an auto insurance policy is required to legally
operate a motor vehicle on public roads. Recommendations for which policy limits
should be used are specified in a number of books. In some jurisdictions, bodily injury
compensation for automobile accident victims has been changed to No Fault systems,
which reduce or eliminate the ability to sue for compensation but provide automatic
eligibility for benefits.
 Casualty insurance insures against accidents, not necessarily tied to any specific
property.
 Credit insurance pays some or all of a loan back when certain things happen to the
borrower such as unemployment, disability, or death.
 Financial loss insurance protects individuals and companies against various
financial risks. For example, a business might purchase cover to protect it from loss of
sales if a fire in a factory prevented it from carrying out its business for a time. Insurance
might also cover failure of a creditor to pay money it owes to the insured. Fidelity bonds
and surety bonds are included in this category.
 Health insurance covers medical bills incurred because of sickness or accidents.
 Home insurance provides compensation for damage or destruction of a home from
disasters. In some geographical areas, the standard insurances exclude certain types of
disasters, such as flood and earthquakes, that require additional coverage. Maintenance-
related problems are the homeowners' responsibility. The policy may include inventory,
or this can be bought as a separate policy, especially for people who rent housing. In
some countries, insurers offer a package which may include liability and legal
responsibility for injuries and property damage caused by members of the household,
including pets
 Liability insurance covers legal claims against the insured. For example, a
homeowner's insurance policy provides the insured with protection in the event of a claim
brought by someone who slips and falls on the property, and brings a lawsuit for her
injuries. Similarly, a doctor may purchase liability insurance to cover any legal claims
against him if his negligence (carelessness) in treating a patient caused the patient injury
and/or monetary harm. The protection offered by a liability insurance policy is two-fold:
a legal defense in the event of a lawsuit commenced against the policyholder, plus
indemnification (payment on behalf of the insured) with respect to a settlement or court
verdict.

 Life insurance provides a monetary benefit to a decedent's family or other

designated beneficiary, and may specifically provide for income to an insured person's
family, burial, funeral and other final expenses. Life insurance policies often allow the
option of having the proceeds paid to the beneficiary either in a lump sum cash payment
or an annuity.

 Annuities provide a stream of payments and are generally classified as insurance because
they are issued by insurance companies and regulated as insurance and require the same
 kinds of actuarial and investment management expertise that life insurance requires.
Annuities and pensions that pay a benefit for life are sometimes regarded as insurance
against the possibility that a retiree will outlive his or her financial resources. In that
sense, they are the complement of life insurance and, from an underwriting perspective,
are the mirror image of life insurance.

 Certain life insurance contracts accumulate cash values, which may be taken by the
insured if the policy is surrendered or which may be borrowed against. Some policies,
such as annuities and endowment policies, are financial instruments to accumulate or
liquidate wealth when it is needed.

 In many countries, such as the U.S. and the UK, the tax law provides that the interest on
this cash value is not taxable under certain circumstances. This leads to widespread use of
life insurance as a tax-efficient method of saving as well as protection in the event of
early death.
 Total permanent disability insurance provides benefits when a person is
permanently disabled and can no longer work in their profession, often taken as an
adjunct to life insurance.
 Locked Funds Insurance is a little known hybrid insurance policy jointly issued
by governments and banks. It is used to protect public funds from tamper by unauthorised
parties. In special cases, a government may authorize its use in protecting semi-private
funds which are liable to tamper. Terms of this type of insurance are usually very strict.
As such it is only used in extreme cases where maximum security of funds is required.
 Marine Insurance covers the loss or damage of goods at sea. Marine insurance
typically compensates the owner of merchandise for losses sustained from fire,
shipwreck, etc., but excludes losses that can be recovered from the carrier.
 Nuclear incident insurance - damages resulting from an incident involving
radioactive materials is generally arranged at the national level. (For the United States,
see Price-Anderson Nuclear Industries Indemnity Act.)
 Political risk insurance can be taken out by businesses with operations in
countries in which there is a risk that revolution or other political conditions will result in
a loss.
 Professional Indemnity Insurance is normally a mandatory requirement for
professional practitioners such as Architects, Lawyers, Doctors and Accountants to
provide insurance cover against potential negligence claims. Non licensed professionals
may also purchase malpractice insurance, it is commonly called Errors and Omissions
Insurance and covers a service provider for claims made against them that arise out of the
performance of specified professional services. For instance, a web site designer can
obtain E&O insurance to cover them for certain claims made by third parties that arise
out of negligent performance of web site development services.
 Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This includes specialized forms of insurance such as fire insurance,
flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler
insurance.
 Title insurance provides a guarantee that title to real property is vested in the
purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued
 in conjunction with a search of the public records done at the time of a real estate
transaction.
 Travel insurance is an insurance cover taken by those who travel abroad, which
covers certain losses such as medical expenses, lost of personal belongings, travel delay,
personal liabilities.. etc.
 Workers' compensation insurance replaces all or part of a worker's wages
lost and accompanying medical expense incurred due to a job-related injury.

Law of Insurance
Every country follows some law for insurance. In India Insurance companies follows insurance
act 1938. The Insurance Act of 1938 was the first legislation governing all forms of insurance to
provide strict state control over insurance business.

Life insurance in India was completely nationalized on January 19, 1956, through the Life
Insurance Corporation Act. All 245 insurance companies operating then in the country were
merged into one entity, the Life Insurance Corporation of India.

The General Insurance Business Act of 1972 was enacted to nationalize the about 100 general
insurance companies then and subsequently merging them into four companies. All the
companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance
and United India Insurance, which were headquartered in each of the four metropolitan cities.[3]

Until 1999, there were not any private insurance companies in India. The government then
introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-
regulating the insurance sector and allowing private companies. Furthermore, foreign investment
was also allowed and capped at 26% holding in the Indian insurance companies.

In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on
par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects
and Company Secretaries.

Insurance Regulatory and Development

Authority
The Insurance Regulatory and Development Authority (IRDA) is a national agency of
the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament
known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging
requirements. Mission of IRDA as stated in the act is "to protect the interests of the
policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for
matters connected therewith or incidental thereto."

Duties, Powers and Functions of IRDA-:

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA

(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance
business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers
and functions of the Authority shall include,

(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel
such registration;

(b) protection of the interests of the policy holders in matters concerning assigning of policy,
nomination by policy holders, insurable interest, settlement of insurance claim, surrender value
of policy and other terms and conditions of contracts of insurance;

(c) specifying requisite qualifications, code of conduct and practical training for intermediary or
insurance intermediaries and agents;

(d) specifying the code of conduct for surveyors and loss assessors;

(e) Promoting efficiency in the conduct of insurance business;

(f) Promoting and regulating professional organizations connected with the insurance and re-
insurance business;

(g) Levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries and other
organisations connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that may be offered by
insurers in respect of general insurance business not so controlled and regulated by the Tariff
Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);

(j) specifying the form and manner in which books of account shall be maintained and statement
of accounts shall be rendered by insurers and other insurance intermediaries;

(k) regulating investment of funds by insurance companies;

(l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or insurance intermediaries;

(n) supervising the functioning of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organisations referred to in clause (f);

(p) specifying the percentage of life insurance business and general insurance business to be
undertaken by the insurer in the rural or social sector; and

(q) exercising such other powers as may be prescribed.

Insurance Company in India

There are two types of Insurance Company

1-: Life Insurance Company

 Life Insurance Corporation of India (LIC)

 HDFC Standard Life Insurance Company Ltd.

 Max New York Life Insurance Co. Ltd.

 ICICI Prudential Life Insurance Company Ltd.

 Kotak Mahindra Old Mutual Life Insurance Limited

 Birla Sun Life Insurance Company Ltd.

 Tata AIG Life Insurance Company Ltd.

 SBI Life Insurance Company Limited .

 ING Vysya Life Insurance Company Private Limited

 Bajaj Allianz Life Insurance Company Limited

 Metlife India Insurance Company Ltd.

 IDBI Fortis Life Insurance

 Reliance Life Insurance Company Limited.

 Aviva Life Insurance Co. India Pvt. Ltd.

 Sahara India Insurance Company Ltd.

 Shriram Life Insurance Company Ltd.

 Bharti AXA Life Insurance Company Ltd.

 Future Generali India Life Insurance Company Limited

 Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.

 Aegon Religare Life Insurance Company Ltd.

 DLF Pramerica Life Insurance Company Ltd.

 Star Union Dai-ichi Life Insurance Co. Ltd.,

2. General Insurance Company

General Insurance Corporation of India (GIC)

 The Oriental Insurance Company Limited

 The New India Assurance Company Limited
 National Insurance Company Limited
 United India Insurance Company Limited.

 Royal Sundaram Alliance Insurance Company Limited

 Reliance General Insurance Company Limited.

 IFFCO Tokio General Insurance Co. Ltd

 TATA AIG General Insurance Company Ltd.

 Bajaj Allianz General Insurance Company Limited

 ICICI Lombard General Insurance Company Limited.

 Apollo DKV Insurance Company Limited

 Future Generali India Insurance Company Limited

 Universal Sompo General Insurance Company Ltd.

 Cholamandalam General Insurance Company Ltd.

 Export Credit Guarantee Corporation Ltd.

 HDFC-Chubb General Insurance Co. Ltd.

 Bharti Axa General Insurance Company Ltd.

 Raheja QBE General Insurance Co. Ltd

 Shriram General Insurance Co. Ltd.

 PENSION
Pension-:
A pension is a periodical payment made by or on behalf of an employer, usually in recognition of
past services. It may be paid either to the person who provided those services or to his or her
spouse or any dependant.

Pension Fund-:
A pension fund is an entity set up to collect monies from employer(s) and workers, invest the
proceeds in securities and other assets, and pay benefits to retirees from the fund's accumulated
resources. A pension fund ordinarily has an investment policy statement that describes the nature
of the assets in which the pension fund can invest. Traditionally, the investment plan of a pension
fund has been quite conservative, sometimes limiting its investment vehicles to
government bonds orlife insurance annuities. In recent decades, the average pension fund has
assumed a more aggressive investment posture to achieve the higher returns required by its
obligations. A pension fund often amasses large pools of funds: the pension fund of the
California teachers, for example, had some $116 billion in assets in 2004. Because of its huge
resources, a pension fund may have considerable clout in the investment community and use its
influence to achieve social goals. In other cases, however, a pension fund will work only to
achieve the highest returns possible for its retiree beneficiaries.
 Types of Pension Funds

Actively managed funds-:

Fund managers select the shares and/or other investments that they expect will perform well. As
market conditions change, they sell and buy other investments. Usually, they are aiming to beat
some benchmark stock market index like the FTSE-A All Share. However, there is no evidence
that they are consistently able to do this. All of the funds below, apart from tracker funds, are
actively managed.

Tracker funds-:

These invest in a range of shares that are selected to mimic the performance of a given stock
market index, such as, the FTSE-100 index. There is relatively little buying and selling of shares
once the fund has been set up so costs are a lot lower than for an actively managed fund. For this
reason, tracker funds are likely to be a popular default fund for stakeholder pension schemes.
Tracker funds are generally considered suitable for people who don't like to take too much risk.
However, you do need to look carefully at the index being tracked. Provided the index covers a
broad spread of companies and industry sectors), the risk should not be high. However, if a few
large companies or particular sectors dominate the index, you could end up with too many eggs
in one basket. Some pundits think that the FTSE-100 Index is now quite risky to track because of
the dominance of information technology and communication companies. Choosing a fund that
tracks a broader index, such as the FTSE-250, could be a better option.

Deposit-based funds-:

Rather like bank and building society, deposit based funds invest in money market accounts, but
pay higher interest rates. Therefore invested money is very safe in the sense that invested
capital can't be lost. However, long term, the return on your money would tend to be low
compared with funds investing in shares. Deposit-based funds are useful when you are
approaching retirement. By switching from shares into deposits, you can lock in past stock
market gains and protect yourself from any falls in share prices in the run-up to retirement.
With-Profits funds-:

Your return is linked mainly to the performance of a wide range of investments, such as, shares,
gilts, bonds and property but also depends on other factors connected with the provider's
business.
The key difference from other types of funds is that your investment grows steadily as bonuses
are added year-by-year and can't fall in value. This makes with-profits funds less risky than
funds linked directly to shares or bonds.

Bond-based funds-:

These invest in gilts, corporate bonds and so on. They tend to be lower-risk than shares,
however, long term they generally do not perform as well. If you are young and a long way from
retirement, bonds might not be for you. However, as you get nearer to retirement it generally
makes sense to spread your risks by putting some of your fund into bonds, increasing the
proportion as retirement approaches.

Share-based funds-:

The fund invests mainly in a spread of shares but sometimes other investments too. The value of
your investment rises and falls with the value of the underlying investments. Provided you
choose a fund with a broad spread of shares, such as, 'UK managed', 'UK growth', 'International
growth' and so on. This is a medium-risk way to invest and so is suitable for many people.

Specialist Funds-:

These invest in the shares and/or other investments of a particular country or particular sector,
e.g., Japanese funds, smaller companies and recovery stocks. Specialist funds tend to be high
risk; sometimes they turn in spectacular growth but equally there have been spectacular nose-
dives too. Generally, these are not the place for the core of your retirement saving, but could be
useful if you can afford to invest extra.
 Advantages of a pension fund

To maintain the same standard of living after retirement-:

Whether a plan is a defined contribution plan, a defined benefit plan or a simplified pension plan
(SIPP), it will nicely complement public plans. The main objective of supplemental pension
plans is to provide retirement income over and above that paid by the public plans.

Concrete advantages for employees and employers

A supplemental pension plan is part of the fringe benefits that an employer can offer his
employees. Besides the financial security it offers after retirement, it is a form of deferred pay
appreciated by employees. For the employer, having a plan can make it easier to attract and keep
competent employees.
 Pension Company in India

 Life Insurance Corporation of India (LIC)

 HDFC Standard Life Insurance Company Ltd.

 Max New York Life Insurance Co. Ltd.

 ICICI Prudential Life Insurance Company Ltd.

 Birla Sun Life Insurance Company Ltd.

 Tata AIG Life Insurance Company Ltd.

 SBI Life Insurance Company Limited .

 ING Vysya Life Insurance Company Private Limited

 Bajaj Allianz Life Insurance Company Limited

 Reliance Life Insurance Company Limited.

 Aviva Life Insurance Co. India Pvt. Ltd.

 Conclusion
Insurance and Pension sector is going well. We see development of this sector step by step. In
old time we had only few companies but now we have many companies. Every company has
some different unique policy. In insurance some companies are offering insurance only for
peoples or some offering only for goods and others services. For both type of Insurance they
have some law. Many insurance companies are providing pension facility also. They have many
types of pension plan. Growth of this sector is very fast. Every year many new companies are
entering in this sector. In urban area many peoples know about it and they think that Insurance is
necessary for them. So they are accepting it regularly, but in rural area only few peoples know
about Insurance and most of them think that it is a useless thing for them so they don’t have
interest. So companies should be think about this area because in this they can gain more
money. For this companies can provide many new plans. Insurance and Pension have many
benefits. Companies are facing a lot of competition because every company wants to capture a
big market share in this sector.