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CHAPTER 2
THEORETICAL FOUNDATION
2.1. Characteristic and Environment of Pension Fund
To
perform
a
good
analysis,
the
first
thing
to
do
is
to
recognize
and
understand
the
entity.
To
understand
a
Pension
Fund,
first
we
should
learn
about
the
basic
concepts,
laws and regulations, and the pension fund financial statement reporting.
2.1.1 Basic concept of pension fund
‘A pension plan is an arrangement whereby an employer provides benefits (payments) to
employees after they retire for services they provided while they were working.’ (Kieso,
Weygandt,
and Warfield, 2002, p. 1018). From
the statement above, Pension Fund can
be
defined
as
a
corporate
body,
which
has the
functions
of
managing
and
perform
program that promise post retirement benefit.
According to Tunggal (1999, p. 14) Type of a pension fund include:
b. Contributory, if employee and firm jointly give contribution to the pension fund
c. Non Contributory, if only the company that gives contribution for the pension
fund.
d. Funded Pension Plan, pension fund program that performs by deposits the fund
to a particular body which separate from the company
e. Unfunded Pension Plan, if the company itself that performs the pension payment
to the employees.
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