FinancialSector:AnIntroduction授課教師：黃勇博士FinancialSector:AnIntroduct1Introduction1.本課程的Outcomes:FinancialInstitutionsCapitalMarketsMoneyMarketsIntroduction1.本課程的Outcomes:22.本課程的AssessmentInformation:

OneformativeAssessmentAcasestudySixrestrictedresponsequestionsshouldbecompletedinnotmorethantwohours.willbepermittedtobringnotes2.本課程的AssessmentInformation:3Section11.Economicagents(finance):

SurplusunitsDeficitunitsAbank:financialintermediary——toachieveadoublecoincidenceofwantsSection11.Economicagents(4

Financialinstitutionactingasprincipal,notasaagent——exampleofaunittrustRelationshipofacontractnatureFinancialinstitutionacting52.Twokindsoffinancialintermediary:Directlending:——copingwiththeproblemofliquiditySecondarymarketDeposit-taker2.Twokindsoffinancialint6

Indirectlending:——notofferingtheliquidity,e.g.pensionfunds——solvetheproblemofmatchingsurplusanddeficitunits

Indirectlending:7

Matchingproblems(P.25):MaturityAmountRiskLocationMatchingproblems(P.25):83.Functionoffinancialintermediary

maturitytransformationaggregationofsmalldepositsrisktransformation3.Functionoffinancialinte9Section2Importanceofmoney1.Theconceptofmoney

Cash:banknotes,coins——advantageofcash——aquickandconvenientmethod——disadvantageofcash(P.36)Cheque——handlingcostSection2Importanceofmoney10

Creditcard:MasterCard,VISAdebitcard:Maestro,DeltaQuasi-cash:tokens,vouchers,couponsCreditcard:MasterCard,VISA11Bankgirocredit:foraone-offpaymentStandingorder:forfixedregularpayments——typicallyusedtopayrent,mortgage,etc.Directdebit:forvaryingamountpayments——usedtomakerecurringpaymentsforcreditcardorutilitybills

Bankgirocredit:foraone-o12

Postalorder/moneyorder:isapaymentorderforapre-specifiedamountofmoneyStorecards——aresubjecttointerestchargesPostalorder/moneyorder:is132.Historyofmoney

Definitionofmoney(P.39)shells:Polynesiansalt:Romanstobacco:prisonersDefinitionoflegaltender(P.42)2.Historyofmoney143.Barter:asocietywithoutcash

examplesofbartertodaydifficultiesofbarter3.Barter:asocietywithout154.Qualitiesofmoneygeneralacceptabilitydurabilitydivisibilityportabilityscarcityrecognisabilityhomogeneity4.Qualitiesofmoney165.Functionsofmoney

mediumofexchange

aunitofaccountastoreofvalueastandardofdeferredpaymentameansofunilateraltransactionsameansofinfluencingeconomicactivity5.Functionsofmoney176.Otherdefinitionsofmoney

convertibleandinconvertiblemoneyprimaryandsecondarymoneyquasi-moneygovt.definitionsofmoney6.Otherdefinitionsofmoney18Section3:TheBankofEngland3.1briefhistory

goldsmithbankers——receipts/promissorynotes——loanedfundstogovt.establishmentin1694,WilliamPatersonaloanof￡1,200,000togovt.atarateof8%joint-stockbankPLCthestatusofgovt.’sbankeranddebtmanagerSection3:TheBankofEngland19

3.2thenatureofBOEajointstockcompanylimitedliabilitybankertootherbankstheBankCharterAct18441998Act3.2thenatureofBOE203.3purposesofBOEmaintainingtheintegrityandvalueofthecurrency——relatedactivities——pricestabilityandmonetarypolicy——MonetaryPolicyCommittee:MPC

3.3purposesofBOE21

maintainingthestabilityofthefinancialsystemdomesticallyandinternationally——relationshipbetweenBOEandFSA——FSC——LOLRseekingtoensuretheeffectivenessofUK’sfinancialservicesmaintainingthestabilityof223.4governanceofBOE

TheCourt(governingbody)NedCoMPCAuditcommitteeGovernor’sCommitteeManagementCommittee3.4governanceofBOE23OrganizationoftheBOE——monetaryanalysisandstatistics：MonetaryandFinancialStatisticsDivision——financialmarketoperations——financialstability——coordinationunittoEuropeOrganizationoftheBOE243.5functionsofBOE

bankertogovernment——ExchequerAccount——temporaryfinance——monetarypolicy——fiscalpolicy3.5functionsofBOE25bankertothebanks——highstreetbanks/clearingbanks/buildingsocieties——cashreserves——operationalbalances——non-operationalbalances——specialdepositsbankertothebanks26noteissue——fiduciarymoneymanagementofnationaldebt——disadvantagesoftoolargegilts——DMO——Treasurybillsandgilt-edgedsecuritiesnoteissue27PSNCR——meetsthedeficit——threeresources——operatingoffice:DMO,CGOmonetarypolicyimplementationLOLRinternationalrelationsPSNCR28managingtheEEA——tostabilizethevalueofsterlingprivatebanking:customers’accountsopenedbefore1946,andstaffmembers’accountsopenmktoperations——tomeetinterestratedecisionsupervisionofthefinancialsystem——FinancialServicesandMarketAct2000paymentandsettlementsystemsmanagingtheEEA293.6BalanceSheetliabilitiesoftheissuedepartmentassetsoftheissuedepartmentnoteissueliabilitiesofbankingdepartment3.6BalanceSheet30Section4UKHighStreetBanks4.1primaryandsecondarybanksretailbankandwholesalebankprimarybank:takepartinUKpaymentsmechanismclearingbankssecondarybanksotheracceptinginstitutionsotherfinancialinstitutionsSection4UKHighStreetBank31Englishbanks——in17thcentury,alargenumberofsmallprivatebanks——in20thcentury,severalmajorbanksScottishbanks——relationswithItalianmerchantsandmoneylenders——moretradingwithEuropeannationsthanEnglishmerchantsEnglishbanks32——theBankofScotland——theRoyalBankofScotland——1845BanknoteAct(Scotland)

thesavingsbankmovement——during18thcentury,minimumdepositofanaccountwas￡10,outofreachofpoorer——thefirstsavingsbankbyHenryDuncan——postofficesavingssysteminUK——theBankofScotland33——1817Act:depositswouldbeinvestedinpublicsector;nomanagerbenefit——TrusteeSavingsBankAssociation,theyarestrictlycontrolledbygovernment——innovationduring1960s:issuingfirstchequeaccounts;unittrusts;offeringloanstootherbanks——radicalproposalsofPageReport——1817Act:depositswouldbe34AllianceandLeicesterGirobank

——operatingthroughpostofficecountersystem——accountsmaintainedinacentraloffice——afloatofmoneycannotcoverthecostofoperationsSQA-HND-Financial-Sector金融業(yè)導(dǎo)論-授課課件35NSB

——formerlyestablishedasPOSB——twomainprinciples——agovernmentdept.accountabletotheTreasury——twoaccounts:ordinaryandinvestment——cash-ISA:havingtaxbenefits——theimportanceofnationalsavings

NSB36Section5FunctionsofRetailBanks5.1functionsofretailbanksnoteissue——authorizationcirculationof￡3mgrantedtoBankofScotland——noteissueabove￡3mwerebackedbygold,butnowbackedbyBankofEnglandnote——ScottishbanksswapnotesSection5FunctionsofRetail37acceptdeposits——chequedeposits——othersightdeposits——timedeposits——NegotiableCDsagentsforpayments——APACS——BACSacceptdeposits38grantloanscreditcardsdrafts/travellers’cheques

grantloans39Section6MerchantBanks 6.1secondarybanking

irrelevantofpaymentsystemDisposingoflargervaluetransactionswithlargebusinessesdealingwithlargenumbersofoverseasresidentsdepositsforafixedperiodoftimeSection6MerchantBanks 6.140

syndicatebank:——spreadingtherisk——loansnotexceedingcapitalandreservesmatchingassetsanddepositssyndicatebank:416.2Merchantbanks

merchantacceptancehousesbillofexchange:——drawer——drawee(acceptor)——threeoptionsonthebill

6.2Merchantbanks42otherfunctionsofmerchantbanks——acceptdeposits——providingfinancethroughacceptancecredits——advisingonnewshareissuesandactingasunderwriter——providingfinancialadviceandinvestmentmanagementotherfunctionsofmerchantb436.3Britishoverseasbanks

BankingservicesforexpatriateBritishtradersandsettlersin19thcenturyLondonbased,overseasbusinessStandardCharteredBankconsortiumbanksnichebanking6.3Britishoverseasbanks44Section7BuildingSociety7.1abriefhistory

mutualsocietiesfinancingthebuildingoftheirownhomesin18thcenturyoperationofbuildingsocietyfromterminatingsocietytopermanentsocietyreductioninnumbersduring20thcenturySection7BuildingSociety7.1457.2reasonsforthereduction

terminatingsocietiesfinancialdifficultieslesscompetenceamalgamationincreasedadministrationcostconvertingtoLLC7.2reasonsforthereduction467.3legislation1962Act1986Act1997Act2000Act7.3legislation477.4productsandservicesaccess,noticeandtermsavingsaccountsoverdrafts,credits,unsecuredloanhousepurchaseservicesmoneytransmissionservicesfx,insurance,stockbroking,unittrusts,pensions,ISAsagenciesforreceiptsandpayments7.4productsandservices487.5principleofremainingsolvent

awiderangeoffinancingsources——CDs——deposits——bondsPIBS7.5principleofremainingso497.6Creditunionsdefinition:mutualsavingsandloansocietiesmembership:sameasBS,buta5000-membershiplimitoperatingrules7.6Creditunions507.7financialhouses

hirepurchase:——instalmentcredit——ownershipofthegoodsadvantagesanddisadvantagesofHP——lowerinterestrate,evenfreeinterest——OwnershipofthegoodsrestswithHP7.7financialhouses51awidesourcesoffunds——issuingnewshares——reservesofundistributedprofits——bankoverdrafts——discountingthebillsofexchange——depositsonmoneymkt——CDs,sightandtermdepositsfrompublicawidesourcesoffunds52

otherservices:——conditionsales——creditsalesagreement——revolvingloans——Loans——leasing——factoringotherservices:53Section8PensionFunds8.1Definition

theincome:contributionsandearningsexpenditure:paymentsandadministrationchargestwomaintypes:——insuredschemes——selfadministratedSection8PensionFunds8.1De548.2schemesofferedbyemployers

non-contributoryschemescontributoryschemesdefinedbenefitschemes(finalsalaryschemes)definedcontributions(moneypurchaseschemes)8.2schemesofferedbyemploye55AVCs——contribution:upto15%ofannualsalary——taxconcessionsFSAVCsAVCs568.3personalpensionschemes

pensionplansdesignedforindividualsbenefitsrelysolelyoncontributiontaxreliefstakeholderpension8.3personalpensionschemes578.4statepensionschemes

abriefhistoryBasicStatePensionSERPSSecondstatepension8.4statepensionschemes58Section9InsuranceCompany9.1thefunctionsofinsurance

collectingthepremiumstoprotectagainstfinanciallosswhenaspecifiedeventoccurringwithinaspecifiedtimeThepremiumscreateapooloffundsInsurancecompaniesinvestthesefundsinmanywaysSection9InsuranceCompany9.59Twomainfunctions:——thespreadofrisksbetweeneconomicentities,generalinsurance——thespreadofrisksoveraperiodoftime,lifeinsuranceTwomainfunctions:609.2productsdefinedbythefunctionitperformsinsuranceofthepersoninsuranceofthepropertyinsuranceoftheliabilityinsuranceoftherights9.2productsdefinedbythef619.3productsdefinedbytheareaofbusinessmarineinsurancelifeassurancefireinsuranceaccidentinsurance9.3productsdefinedbythear62

9.4LloydsofLondonfromacoffeehousetotheFirstCommitteeofLloydsfromindividualmemberswithunlimitedliabilitytosyndicatesbenefitingfromlimitedliability9.4LloydsofLondon63Section10CollectiveInvestments10.1Investmenttrustsclose-endedfundsSection10CollectiveInvestm6410.2unittrustsopen-endedfundsindependenceoftrusteesandmanagementcompanytheroleoffundmanagersvalueofaunitbidandoffer(marketmaker)10.2unittrusts65

incomeofatrust:——initialcharges——annualmanagementfeestwotypesofunits——incomeunits——accumulationunitsincomeofatrust:6610.3OEICsahybridbetweeninvestmenttrustsandunittrustsquotedonLSE

10.3OEICs67Section11Capitalmarkets11.1primaryandsecondarymktprimarymkt:wherenewsecuritiesareissuedinreturnforcapitaldirectfinancinggovernmentsecuritiescompaniesstocksandsharestheroleofmerchantbank

Section11Capitalmarkets1168advantagesanddisadvantagesofaquotationrequirementsforquotationadvantagesanddisadvantages69thesecondarymkt:stockexchangeandAIMthefunctionofLSEthebigbang(27Oct.1986)thesecondarymkt:stockexch7011.2FunctionsofmembersofLSE

Typesofmemberfirms——brokers/dealers——marketmakers——IDBs——SEMBs11.2Functionsofmembersof71

AIMover-the-countergilt-edgedmarketAIM7211.3Newissues

offerforsaleofferforsubscriptionplacingintroduction11.3Newissues7311.4securitiestradedonLSE

ordinarysharespreferencesharesdebenturesconvertiblesecrities11.4securitiestradedonLSE74Section12MoneyMarkets12.1definition

dealinginlargeamountsofmoneyonaveryshorttimesettlementbasismoneyislentandborrowedforshorttimeshorttermsecuritiesaretradedSection12MoneyMarkets12.17512.2discountmarkettheroleofdiscounthousesfunctionsofdiscounthouses——takingveryshort-termdepositsfrombanks——discountingcommercialbillsofexchange——underwritingtheweeklytenderfortreasurybills——asmarketmakersofshort-termfinancialinstruments12.2discountmarket76discounthousesandBOE——providingthebankswithcalledmoneytomeettheoperationalbalancesthebanksmustmaintainwiththeBankofEngland——therateofinterestoncalledmoneycanbeadjusteddailydiscounthousesandBOE77discounthousesandbillfinance——billofexchange——bankbills——eligiblebills——otherbillsacceptedbycompanies:finetradebillsdiscounthousesandbillfina78discounthousesandgovernmentfinance——directfinancebyholdingshorttermgilt——underwritingtheweeklyTreasurybills——Treasurybillsdiscounthousesandgovernmen79

Euro-Treasurybillsdiscounthousesasmarketmakers:Treasurybills,commercialbills,CDsEuro-Treasurybills80Parallelmarkets——interbankmarket——intercompanymarket——localauthoritymarket——NegotiableCDs——sterlingcommercialpapermarketParallelmarkets81Section13Options,FuturesSection13Options,Futures82FinancialSector:AnIntroduction授課教師：黃勇博士FinancialSector:AnIntroduct83Introduction1.本課程的Outcomes:FinancialInstitutionsCapitalMarketsMoneyMarketsIntroduction1.本課程的Outcomes:842.本課程的AssessmentInformation:

OneformativeAssessmentAcasestudySixrestrictedresponsequestionsshouldbecompletedinnotmorethantwohours.willbepermittedtobringnotes2.本課程的AssessmentInformation:85Section11.Economicagents(finance):

SurplusunitsDeficitunitsAbank:financialintermediary——toachieveadoublecoincidenceofwantsSection11.Economicagents(86

Financialinstitutionactingasprincipal,notasaagent——exampleofaunittrustRelationshipofacontractnatureFinancialinstitutionacting872.Twokindsoffinancialintermediary:Directlending:——copingwiththeproblemofliquiditySecondarymarketDeposit-taker2.Twokindsoffinancialint88

Indirectlending:——notofferingtheliquidity,e.g.pensionfunds——solvetheproblemofmatchingsurplusanddeficitunits

Indirectlending:89

Matchingproblems(P.25):MaturityAmountRiskLocationMatchingproblems(P.25):903.Functionoffinancialintermediary

maturitytransformationaggregationofsmalldepositsrisktransformation3.Functionoffinancialinte91Section2Importanceofmoney1.Theconceptofmoney

Cash:banknotes,coins——advantageofcash——aquickandconvenientmethod——disadvantageofcash(P.36)Cheque——handlingcostSection2Importanceofmoney92

Creditcard:MasterCard,VISAdebitcard:Maestro,DeltaQuasi-cash:tokens,vouchers,couponsCreditcard:MasterCard,VISA93Bankgirocredit:foraone-offpaymentStandingorder:forfixedregularpayments——typicallyusedtopayrent,mortgage,etc.Directdebit:forvaryingamountpayments——usedtomakerecurringpaymentsforcreditcardorutilitybills

Bankgirocredit:foraone-o94

Postalorder/moneyorder:isapaymentorderforapre-specifiedamountofmoneyStorecards——aresubjecttointerestchargesPostalorder/moneyorder:is952.Historyofmoney

Definitionofmoney(P.39)shells:Polynesiansalt:Romanstobacco:prisonersDefinitionoflegaltender(P.42)2.Historyofmoney963.Barter:asocietywithoutcash

examplesofbartertodaydifficultiesofbarter3.Barter:asocietywithout974.Qualitiesofmoneygeneralacceptabilitydurabilitydivisibilityportabilityscarcityrecognisabilityhomogeneity4.Qualitiesofmoney985.Functionsofmoney

mediumofexchange

aunitofaccountastoreofvalueastandardofdeferredpaymentameansofunilateraltransactionsameansofinfluencingeconomicactivity5.Functionsofmoney996.Otherdefinitionsofmoney

convertibleandinconvertiblemoneyprimaryandsecondarymoneyquasi-moneygovt.definitionsofmoney6.Otherdefinitionsofmoney100Section3:TheBankofEngland3.1briefhistory

goldsmithbankers——receipts/promissorynotes——loanedfundstogovt.establishmentin1694,WilliamPatersonaloanof￡1,200,000togovt.atarateof8%joint-stockbankPLCthestatusofgovt.’sbankeranddebtmanagerSection3:TheBankofEngland101

3.2thenatureofBOEajointstockcompanylimitedliabilitybankertootherbankstheBankCharterAct18441998Act3.2thenatureofBOE1023.3purposesofBOEmaintainingtheintegrityandvalueofthecurrency——relatedactivities——pricestabilityandmonetarypolicy——MonetaryPolicyCommittee:MPC

3.3purposesofBOE103

maintainingthestabilityofthefinancialsystemdomesticallyandinternationally——relationshipbetweenBOEandFSA——FSC——LOLRseekingtoensuretheeffectivenessofUK’sfinancialservicesmaintainingthestabilityof1043.4governanceofBOE

TheCourt(governingbody)NedCoMPCAuditcommitteeGovernor’sCommitteeManagementCommittee3.4governanceofBOE105OrganizationoftheBOE——monetaryanalysisandstatistics：MonetaryandFinancialStatisticsDivision——financialmarketoperations——financialstability——coordinationunittoEuropeOrganizationoftheBOE1063.5functionsofBOE

bankertogovernment——ExchequerAccount——temporaryfinance——monetarypolicy——fiscalpolicy3.5functionsofBOE107bankertothebanks——highstreetbanks/clearingbanks/buildingsocieties——cashreserves——operationalbalances——non-operationalbalances——specialdepositsbankertothebanks108noteissue——fiduciarymoneymanagementofnationaldebt——disadvantagesoftoolargegilts——DMO——Treasurybillsandgilt-edgedsecuritiesnoteissue109PSNCR——meetsthedeficit——threeresources——operatingoffice:DMO,CGOmonetarypolicyimplementationLOLRinternationalrelationsPSNCR110managingtheEEA——tostabilizethevalueofsterlingprivatebanking:customers’accountsopenedbefore1946,andstaffmembers’accountsopenmktoperations——tomeetinterestratedecisionsupervisionofthefinancialsystem——FinancialServicesandMarketAct2000paymentandsettlementsystemsmanagingtheEEA1113.6BalanceSheetliabilitiesoftheissuedepartmentassetsoftheissuedepartmentnoteissueliabilitiesofbankingdepartment3.6BalanceSheet112Section4UKHighStreetBanks4.1primaryandsecondarybanksretailbankandwholesalebankprimarybank:takepartinUKpaymentsmechanismclearingbankssecondarybanksotheracceptinginstitutionsotherfinancialinstitutionsSection4UKHighStreetBank113Englishbanks——in17thcentury,alargenumberofsmallprivatebanks——in20thcentury,severalmajorbanksScottishbanks——relationswithItalianmerchantsandmoneylenders——moretradingwithEuropeannationsthanEnglishmerchantsEnglishbanks114——theBankofScotland——theRoyalBankofScotland——1845BanknoteAct(Scotland)

thesavingsbankmovement——during18thcentury,minimumdepositofanaccountwas￡10,outofreachofpoorer——thefirstsavingsbankbyHenryDuncan——postofficesavingssysteminUK——theBankofScotland115——1817Act:depositswouldbeinvestedinpublicsector;nomanagerbenefit——TrusteeSavingsBankAssociation,theyarestrictlycontrolledbygovernment——innovationduring1960s:issuingfirstchequeaccounts;unittrusts;offeringloanstootherbanks——radicalproposalsofPageReport——1817Act:depositswouldbe116AllianceandLeicesterGirobank

——operatingthroughpostofficecountersystem——accountsmaintainedinacentraloffice——afloatofmoneycannotcoverthecostofoperationsSQA-HND-Financial-Sector金融業(yè)導(dǎo)論-授課課件117NSB

——formerlyestablishedasPOSB——twomainprinciples——agovernmentdept.accountabletotheTreasury——twoaccounts:ordinaryandinvestment——cash-ISA:havingtaxbenefits——theimportanceofnationalsavings

NSB118Section5FunctionsofRetailBanks5.1functionsofretailbanksnoteissue——authorizationcirculationof￡3mgrantedtoBankofScotland——noteissueabove￡3mwerebackedbygold,butnowbackedbyBankofEnglandnote——ScottishbanksswapnotesSection5FunctionsofRetail119acceptdeposits——chequedeposits——othersightdeposits——timedeposits——NegotiableCDsagentsforpayments——APACS——BACSacceptdeposits120grantloanscreditcardsdrafts/travellers’cheques

grantloans121Section6MerchantBanks 6.1secondarybanking

irrelevantofpaymentsystemDisposingoflargervaluetransactionswithlargebusinessesdealingwithlargenumbersofoverseasresidentsdepositsforafixedperiodoftimeSection6MerchantBanks 6.1122

syndicatebank:——spreadingtherisk——loansnotexceedingcapitalandreservesmatchingassetsanddepositssyndicatebank:1236.2Merchantbanks

merchantacceptancehousesbillofexchange:——drawer——drawee(acceptor)——threeoptionsonthebill

6.2Merchantbanks124otherfunctionsofmerchantbanks——acceptdeposits——providingfinancethroughacceptancecredits——advisingonnewshareissuesandactingasunderwriter——providingfinancialadviceandinvestmentmanagementotherfunctionsofmerchantb1256.3Britishoverseasbanks

BankingservicesforexpatriateBritishtradersandsettlersin19thcenturyLondonbased,overseasbusinessStandardCharteredBankconsortiumbanksnichebanking6.3Britishoverseasbanks126Section7BuildingSociety7.1abriefhistory

mutualsocietiesfinancingthebuildingoftheirownhomesin18thcenturyoperationofbuildingsocietyfromterminatingsocietytopermanentsocietyreductioninnumbersduring20thcenturySection7BuildingSociety7.11277.2reasonsforthereduction

terminatingsocietiesfinancialdifficultieslesscompetenceamalgamationincreasedadministrationcostconvertingtoLLC7.2reasonsforthereduction1287.3legislation1962Act1986Act1997Act2000Act7.3legislation1297.4productsandservicesaccess,noticeandtermsavingsaccountsoverdrafts,credits,unsecuredloanhousepurchaseservicesmoneytransmissionservicesfx,insurance,stockbroking,unittrusts,pensions,ISAsagenciesforreceiptsandpayments7.4productsandservices1307.5principleofremainingsolvent

awiderangeoffinancingsources——CDs——deposits——bondsPIBS7.5principleofremainingso1317.6Creditunionsdefinition:mutualsavingsandloansocietiesmembership:sameasBS,buta5000-membershiplimitoperatingrules7.6Creditunions1327.7financialhouses

hirepurchase:——instalmentcredit——ownershipofthegoodsadvantagesanddisadvantagesofHP——lowerinterestrate,evenfreeinterest——OwnershipofthegoodsrestswithHP7.7financialhouses133awidesourcesoffunds——issuingnewshares——reservesofundistributedprofits——bankoverdrafts——discountingthebillsofexchange——depositsonmoneymkt——CDs,sightandtermdepositsfrompublicawidesourcesoffunds134

otherservices:——conditionsales——creditsalesagreement——revolvingloans——Loans——leasing——factoringotherservices:135Section8PensionFunds8.1Definition

theincome:contributionsandearningsexpenditure:paymentsandadministrationchargestwomaintypes:——insuredschemes——selfadministratedSection8PensionFunds8.1De1368.2schemesofferedbyemployers

non-contributoryschemescontributoryschemesdefinedbenefitschemes(finalsalaryschemes)definedcontributions(moneypurchaseschemes)8.2schemesofferedbyemploye137AVCs——contribution:upto15%ofannualsalary——taxconcessionsFSAVCsAVCs1388.3personalpensionschemes

pensionplansdesignedforindividualsbenefitsrelysolelyoncontributiontaxreliefstakeholderpension8.3personalpensionschemes1398.4statepensionschemes

abriefhistoryBasicStatePensionSERPSSecondstatepension8.4statepensionschemes140Section9InsuranceCompany9.1thefunctionsofinsurance

collectingthepremiumstoprotectagainstfinanciallosswhenaspecifiedeventoccurringwithinaspecifiedtimeThepremiumscreateapooloffundsInsurancecompaniesinvestthesefundsinmanywaysSection9InsuranceCompany9.141Twomainfunctions:——thespreadofrisksbetweeneconomicentities,generalinsurance——thespreadofrisksoveraperiodoftime,lifeinsuranceTwomainfunctions:1429.2productsdefinedbythefunctionitperformsinsuranceofthepersoninsuranceofthepropertyinsuranceoftheliabilityinsuranceoftherights9.2productsdefinedbythef1439.3productsdefinedbytheareaofbusinessmarineinsurancelifeassurancefire