Overfunded Pension Plan


Overfunded Pension Plan

A company retirement plan that has more assets than liabilities. In other words, there is a surplus amount of money needed to cover current and future retirements. Although the surplus can legally be recorded as company income, it cannot be paid out to corporation shareholders like other income as it is reserved for current and future retirees.

Generally, pension plans become overfunded as a result of a stock market boom (provided the pension plan is invested in stocks, as many are) or when a defined-benefit plan is converted to a cash-balance plan. It usually more common for a pension plan to be underfunded as investment shortfalls tend to be more common.


Investment dictionary. . 2012.


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.