Underfunded pension plan

Underfunded pension plan

A pension plan that has a negative surplus (i.e., liabilities exceed assets).

Underfunded Pension Plan

A pension plan that has more liabilities than assets. That is, the retirees covered under the pension plan have been promised more than the plan contains. This may happen for a variety of reasons, such as the pension's investments not going as expected, or perhaps retirees are living longer than expected. It can lead to bankruptcy, though some pension plans have government guarantees.
References in periodicals archive ?
For the first round of reporting, the state Treasury Department has found more than 110 out of 490 local units of government have been preliminarily identified as having an underfunded pension plan or retirement health care plan, or both.
In addition the amendment allows for a smaller number of Carpenter common shares to be placed into an escrow account in connection with Latrobe's underfunded pension plan and requires Carpenter to pay for certain additional transaction costs.
The reduction of the company's underfunded pension plan and share repurchases will reduce Kellogg's liquidity position and increase debt levels, which were previously expected to remain stable through 2010," DBRS noted.
Consequently, an underfunded pension plan was not only permissible, but was the target itself.
United Airlines recently turned its underfunded pension plan over to the Pension Benefit Guaranty Corp.
The brewery said lenders won't finance $4 million in much-needed plant improvements because of the underfunded pension plan.
When the PBGC stepped in to administer the company's underfunded pension plan, Clarke's benefits were slashed by $700.
Pension reform legislation in the United States is usually dated from the mid-1960s bankruptcy of the Studebaker automobile company and the failure of its underfunded pension plan, when benefit checks stopped coming for many already-retired people and prospective retirees were deprived of their future benefit promises.
Corporations which have an underfunded pension plan next need to determine whether an additional liability will enter the calculation and presentation process.
5 million settlement with about 500 people in its underfunded pension plan, covering less than a third of a shortfall in expected benefits.
31% less for the project cash flows when it faces the financial constraints imposed by a severely underfunded pension plan.