Which of the following is NOT a type of pension fund?

1) Defined benefit plan

2) Defined contribution plan

3) State-sponsored retirement scheme

4) Money market fund

Solution

A defined benefit plan is a pension plan where the employer guarantees a specified retirement benefit amount for the employee based on factors such as salary history and years of service. A defined contribution plan, on the other hand, is a plan where the employer and/or employee make regular contributions to the employee's retirement account, with the eventual payout based on the account balance at retirement.   State-sponsored retirement schemes, such as the National Pension System (NPS) in India or the Social Security program in the United States, are government-run pension schemes designed to provide retirement benefits to citizens.   Money market funds, on the other hand, are a type of mutual fund that invests in short-term, low-risk securities such as treasury bills, certificates of deposit, and commercial paper. While they may be a part of an investment portfolio, they are not considered a type of pension fund. Hence, statement 4 is the correct answer.