Besides being a forward-thinking way to take care of your employees, PPFs come with a significant tax benefit. If set up properly, they can be exempt from corporate tax.

To qualify for that exemption, a pension fund needs to meet a few key conditions:

Assets must be designated for pension use only – either by law, contract, or funded directly by pension contributions.

Employees must have a clear right or claim to the assets or earnings of the fund.

Income must come from specific sources (we’ll get to those in a moment).

And here’s the good news: these conditions are very achievable with the right setup.

What Kind of Income Can a PPF Earn (and Still Be Tax-Free)?

To maintain its tax-exempt status, a private pension fund must earn income from certain approved sources, as outlined in Ministerial Decision No. 115 of 2023. These include:

Investments and deposits held to fulfill pension obligations (as long as it’s not considered a business activity).
Underwriting commissions related to the fund.
Rebates of fees or charges from fund managers (not considered payment for services).
Other income that aligns with a well-defined investment strategy aimed at supporting employees' retirement or end-of-service benefits.

Discounted Gift Trusts

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