The Regulation of Pension Funds
Almost all types of financial products are supposed to be regulated. Most of the stocks and bonds that we can buy in the financial markets have been vetted by regulatory agencies before they can be sold to the public at large. Some degree of regulation is important since it forms the basis of working in a capitalist system. However, when it comes to pension funds, the degree of regulation is quite high.
Governments all over the world take a lot of interest in ensuring that pension funds are closely regulated. Each investment made by pension funds is audited to ensure that it follows the highest moral and ethical standards. A lot of people believe that pension funds are excessively regulated and that this excessive regulation is an impediment to the functioning of pension funds.
In this article, we will have a closer look at what pension fund regulation is and what are the factors which make it necessary to closely govern the functioning of pension funds.
What is Pension Fund Regulation?
In order to understand the importance of pension fund regulation, it is important to first understand what constitutes pension fund regulation. The following activities are considered to be related to pension funds governance:
Pension fund regulation ensures that the interests of the investors are protected from unscrupulous financial practices. It is important to distinguish between regulation and supervision.
Regulation is about creating a framework of rules and creating a system of checks and balances. The actual work of supervision is often delegated to different authorities. Regulation is a higher-level activity whereas supervision is a day-to-day level activity.
Why is Pension Fund Regulation Required?
There are many economic experts who believe that pension funds should not be regulated so closely. However, there are certain factors that make it more important to closely regulate pension funds. Some of these factors have been written below:
The bottom line is that pension funds need to be closely regulated. The lack of regulation will create an atmosphere where the retirement savings of people will be endangered. This will create a situation wherein people will stop investing in pension funds altogether.

Authorship/Referencing - About the Author(s)
The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.