Definition: Funded pension schemes
Funded schemes are arrangements where there is an accumulation of assets, mainly financial assets, from contributions, with the explicit objective of ensuring all or a major part of payment of the future benefits from these assets (resale with possible capital gains, property income). In this case the financial risk comes mainly from uncertainty over asset performance.
The participants do not own directly the assets that are collectively managed (similarly to mutual funds) but they hold an individual claim on the reserves that are accumulated that is recorded in ESA95 as AF.612 "net equity of households in pension funds reserves”. This
claim is generally not tradable, in the sense that no market exists, and its transferability (notably in case of some change in the professional position or early death) may be submitted to specific conditions.
Eurostat, "Classification of funded pension schemes and impact on government finance", 2004 edition, Office for Official Publications of the European Communities, 2004, Luxembourg