Overfunding

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Overfunding

1. Describing any investment, annuity or other financial instrument containing more assets than liabilities. That is, contributions and the investment of those contributions amount to more than what the instrument owes to holders. This is considered a sign of financial health for the instrument.

2. In the United Kingdom, the practice of lending more government securities than the government is expected to need to fund its activities. The excess is used to fight inflation.
References in periodicals archive ?
During the January 15, 1997, hearing on the proposed regulations, government representatives expressed concern that some foreign jurisdictions may permit taxpayers to overfund their plans, thereby enabling taxpayers to shield income-generating assets from the reach of U.
Ian Barnes, Deloitte tax partner, said: "We worked closely with MHPA to implement a solution which immediately removes the pension scheme deficit, while also reducing the risk that the sponsor will overfund the scheme in future years.
The ability to save through a pension plan at before-tax rates of return provides incentives for owners of corporations to overfund pension plans and later to withdraw the excess assets, either through reversions or through lower future contributions.