The Guaranteed Fund is an investment vehicle for pension funds that has been offered globally by Insurance Companies over the years.The investment vehicle operates on the principle of pooling contribution from various pension funds. The pooling has the effect of providing the critical mass required to invest in long term assets which underpin security and growth i.e. property and equities
The critical dimension is that the Actuary aims to ensure that bonus/ investment returns are smoothed. This is done so as to protect members due for retirement in any particular year from fluctuations in investment performance that would negatively affect their pension.
- Leading from the above, the Actuary creates and maintains a reserve from the attained investment returns on an annual basis. The cumulative reserves are invested and managed so as to provide a safety valve in years of bad investment and economic performance. This has enabled clients invested in the Guaranteed Fund to get a positive rate of return when market performance would dictate otherwise.
- The guarantees, security and growth embedded in this investment vehicle are under-pinned by investments in a diversified range of carefully selected asset classes i.e. Property, Equity and Fixed interest securities.