Privately administered pension schemes may be divided into 3 main classes:—

(1) those which provide pensions based on the salary received by the members.

(2) The type known as the “Money-purchase” fund in which each year's contribution is applied as a single premium to purchase an amount of pension at the retiring age.

(3) Funds which provide pensions which are fixed in amount in return for a definite contribution which varies according to the age at entry.

There are, of course, numerous funds which do not fall exactly into one of these categories—in fact, private funds are usually framed so as to suit the individual needs or preferences of the employers and the members.