The correct answer is: B. Insured Pension scheme
An insured pension scheme is a type of pension scheme in which the employer manages the fund through a trust and pays the pension through the purchase of an annuity from a life insurance company. This type of scheme is often used by employers who want to provide their employees with a secure retirement income.
An uninsured pension scheme is a type of pension scheme in which the employer manages the fund directly and pays the pension out of the fund. This type of scheme is often used by employers who want to keep control of their pension costs.
Both insured and uninsured pension schemes have their own advantages and disadvantages. Insured pension schemes are often seen as being more secure, as the pension is guaranteed by the life insurance company. However, they can also be more expensive, as the employer has to pay a premium to the life insurance company. Uninsured pension schemes are often seen as being more flexible, as the employer has more control over the fund. However, they can also be more risky, as the employer is responsible for the investment performance of the fund.
The best type of pension scheme for an employer will depend on their individual circumstances. Employers should carefully consider their needs and objectives before deciding which type of scheme to implement.
Here are some additional details about each option:
- Uninsured pension scheme: In an uninsured pension scheme, the employer manages the fund directly and pays the pension out of the fund. This type of scheme is often used by employers who want to keep control of their pension costs. However, it can also be more risky, as the employer is responsible for the investment performance of the fund.
- Insured pension scheme: In an insured pension scheme, the employer manages the fund through a trust and pays the pension through the purchase of an annuity from a life insurance company. This type of scheme is often used by employers who want to provide their employees with a secure retirement income. However, it can also be more expensive, as the employer has to pay a premium to the life insurance company.
- Both A & B: This option is not correct, as it is not possible for a pension scheme to be both insured and uninsured.
- None of the above: This option is also not correct, as there are two possible answers to the question.