What is meant by the term retention fund and give objectives and advantages?

A retention fund is a portion of money that is set aside by a company or organization for a specific purpose, such as covering future expenses, liabilities, or investments. This fund is typically held in reserve and not used for day-to-day operations.

Objectives of a retention fund may include:

1. Providing a financial cushion for unexpected expenses or emergencies.
2. Funding future projects or investments.
3. Covering potential liabilities or legal claims.
4. Ensuring financial stability and sustainability for the organization.

Advantages of a retention fund may include:

1. Financial security: Having a retention fund can provide peace of mind knowing that there are funds available to cover unexpected expenses or emergencies.
2. Stability: A retention fund can help stabilize the organization's finances and provide a buffer against economic downturns or other challenges.
3. Flexibility: The fund can be used for a variety of purposes, giving the organization flexibility in how it manages its finances.
4. Long-term planning: By setting aside funds for future projects or investments, a retention fund can help the organization plan for the future and achieve its long-term goals.