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.

Look at other dictionaries:

  • Overfunded pension plan — A pension plan that has a positive surplus ( i.e., assets exceed liabilities). The New York Times Financial Glossary …   Financial and business terms

  • overfunded pension plan — A pension plan that has a positive surplus ( i.e., assets exceed liabilities) . Bloomberg Financial Dictionary …   Financial and business terms

  • Pension Benefit Guaranty Corporation — (United States) Agency overview Formed September 2, 1974 …   Wikipedia

  • pension reversion — Termination of an overfunded defined benefit pension plan and replacement of it with a life insurance company sponsored fixed annuity plan. Bloomberg Financial Dictionary …   Financial and business terms

  • fund — A fiscal and accounting entity with a self balancing set of accounts in which cash and other financial resources, all related liabilities and residual equities, or balances, and charges therein, are recorded and segregated to carry on specific… …   Financial and business terms