Funds for pensions
Contributions toward the financing of social expenditure usually take the form of payments made during the year. However, the contributions are also used to establish funds, particularly pension funds.
The funds’ purpose is to guarantee that future payment obligations can be met (via premium reserve systems). Funds may also be established within allocation systems, in which the costs should, in principle, be covered by the current year’s contributions. This is intended to create a buffer designed to reduce variations in incoming and outgoing payments over time.