overfunded pension plan
Definition
In which the value of projected benefits exceeds the value of projected obligations; thus, a pension plan with a surplus. This situation usually occurs during a stock market boom as pension plans invest heavily in high quality stocks. Or it may occur when a defined benefit plan is converted to a cash-balance plan. The surplus can legally be shown as the company's income but cannot be paid out to the stockholders because it belongs to the pension plan.
Use this term in a sentence
“ You may want to try and make sure that you do not end up giving out an overfunded pension plan that may break your budget. ”
“ The overfunded pension plan was a result of the stock market reaching an all time high this year which obviously pleased investors. ”
“ I have a friend who manages a pension, because of a freak accident at the factory killing many of the oldest workers the company found themselves with an overfunded pension plan. ”
