What is the primary purpose of a pension scheme?

The primary purpose of a pension scheme is to serve as a method for saving money for retirement. Pension schemes are designed to provide individuals with a dependable source of income once they retire, ensuring financial security during their non-working years. These plans typically involve regular contributions made by employees and sometimes employers over the course of a worker's career.

As individuals contribute to the pension scheme, the accumulated funds are invested, which can lead to growth over time. However, the core objective remains focused on providing a stable financial resource for retirees, rather than serving solely as an investment strategy. While some pension schemes may have investment components, their primary function is not to be an investment strategy or to provide health insurance. They also do not classify as government aid, which typically refers to programs that provide direct support or assistance to citizens without requiring a prior contribution or work history.