【正文】 tle or nothing. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 14 Pension Funds ? Defined contribution plans specify how much must be contributed each year in the name of each worker, but the amount to be received when retirement is reached will vary depending upon the amount saved and the returns earned on accumulated savings. ? The funds saved belong to the employee, and are portable. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 15 Pension Funds Assets of Pension Funds 01 , 0 0 02 , 0 0 03 , 0 0 04 , 0 0 05 , 0 0 06 , 0 0 07 , 0 0 08 , 0 0 01961 1966 1971 1976 1981 1986 1991 1996 2020Pri v a t e Pe n s i o n F u n d sG o v e rn m e n t R e t i re m e n t F u n d sT o t a l F i n a n c i a l A s s e t s$ Billions Data Source: Board of Governors of the Federal Reserve System ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 16 Pension Funds ? Pension funds are longterm investors with limited need for liquidity. ? Their ining cash receipts are known with considerable accuracy, and their cash outflows are not difficult to forecast. ? However, the pension fund industry is closely regulated in all its activities. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 17 Pension Funds Source: Board of Governors of the Federal Reserve System 17 ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 18 Pension Funds Source: Board of Governors of the Federal Reserve System 17 ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 19 Pension Funds ? There appear to be serious problems ahead for both the growth and stability of pension plans. ? The rising proportion of pension beneficiaries to working contributors, related to the aging of the population. ? The increasing cost of maintaining pension programs, especially defined benefit plans. ? The rising cost of government regulation with respect to reporting requirements and employee rights. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 20 Life Insurance Companies ? Life insurance panies offer their customers a hedge against the risk of earnings losses that often follow death, disability, or retirement. ? Policyholders receive risk protection in return for their payment of policy premiums. ? Additional funds to cover claims and expenses are provided by the earnings from the investments made by the insurance panies. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 21 Life Insurance Companies ? The principal kinds of policies sold by life insurance panies include ordinary or whole life, term life, endowment, group life, industrial life, universal life, variable life, adjustable life, and credit life insurance. ? Many policies bine financial protection against death, disability, and retirement with savings plans to help the policyholder prepare for some important future financial need. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 22 Life Insurance Companies in the . Data Source: American Council of Life Insurers ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 23 Life Insurance Companies ? The insurance business is founded upon the law of large numbers – a risk that is not predictable for one person can be forecast accurately for a sufficiently large group. ? So, life insurers invest the bulk of their funds in longterm securities, and frequently follow a “buy and hold” strategy. They generally pursue ine certainty and safety of principal in their investments. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 24 Life Insurance Companies Source: Board of Governors of the Federal Reserve System 17 ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 25 Life Insurance Companies ? The majority of the close to 1,700 . life insurance panies are stockholderowned corporations. The rest are mutuals that issue ownership shares to their policyholders. ? The population reached a high of almost 2,350 in 1988 and has been falling ever since. ? Most notably, the largest life insurers today are converging with other financial institutions to form huge multiproduct businesses. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 26 Life Insurance Companies ? Life insurers are under increasing pressure to develop new services. ? Among the most important recent innovative services are universal and adjustable life insurance, variable premium and variable life insurance, mutual funds, tax shelters, venture capital loans, guaranteed investment contracts, corporate cash management systems, and deferred annuities. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 27 PropertyCasualty (P/C) Insurance Companies ? Propertycasualty (P/C) insurers (insurance supermarkets) offer protection against events like fire, theft, bad weather, and negligence that result in injury to persons or property. ? Traditional P/C insurance covers automobile, fire, marine, personal liability, and property. ? Many P/C insurers have also branched into h