Pension Plan Design and Funding

This branch keeps pension-plan vocabulary together instead of mixing it with individual account wrappers.

It covers defined-benefit and defined-contribution plans, pension funds, money purchase plans, advance funding, unfunded plans, underfunding, overfunding, and variable-benefit structures.

In this section

• Defined Benefit, Defined Contribution, And Pension Funds
  Personal-finance terms for defined benefit plans, defined contribution plans, pension funds, money-purchase plans, and variable benefit plans.
  • Defined Benefit and Defined Contribution Plan Design
    Pension plan-design terms for defined benefit, defined contribution, and related plan structures.
    • Deferred Contribution Plan: Tax-Deferred Profit-Sharing Contributions
      A comprehensive overview of Deferred Contribution Plans, whereby unused deductions can be carried forward and utilized in future profit-sharing contributions, optimizing tax benefits for employers.
    • Defined-Benefit Pension Plan
      Pension arrangement that promises a specified retirement benefit, usually based on salary, service, and plan formula.
    • Defined-Contribution Pension Plan
      Retirement plan in which contributions are specified but the final benefit depends on investment performance and account value.
    • Money Purchase Plan: Definition, Benefits, and How It Works
      Explore the comprehensive definition, benefits, and the working mechanism of a Money Purchase Plan, a type of employee retirement benefit plan.
    • Variable Benefit Plan: Overview, Historical Context, and Investment Impact
      A comprehensive exploration of variable-benefit plans, including their definition, history, investment impact, and special considerations for retirement savings.
  • Pension Funds and Plan Basics
    Basic pension and pension-fund terms used in retirement plan comparisons.
    • Pension
      Retirement-income arrangement that pays benefits from an accumulated plan or formula-based promise, often through employer or public systems.
    • Pension Fund
      Asset pool set aside to finance promised retirement benefits for workers or beneficiaries.
    • Pension Plan
      Employer or public retirement arrangement that funds future benefits for workers through contributions, pooled assets, and plan rules.
• Pension Funding Status And Plan Assets
  Personal-finance terms for funded, unfunded, underfunded, overfunded, and advance-funded pension plans.
  • Advance-Funded Pension Plan
    Pension plan structure that sets aside assets during employees’ working years rather than waiting to pay benefits only when they come due.
  • Funded Pension Plan
    Pension plan backed by assets that are set aside in advance to support future retirement benefit payments.
  • Overfunded Pension Plan
    Pension plan whose assets exceed the present value of projected benefit liabilities under current assumptions.
  • Underfunded Pension Plan
    Pension plan whose assets are insufficient to cover the value of promised retirement benefits under current assumptions.
  • Unfunded Pension Plan
    Pension plan that pays benefits without maintaining a dedicated prefunded asset pool large enough to cover future obligations in advance.