A fully funded pension liability is one in which

Question

Quizplus · Accepted Answer

A fully funded pension liability is one in which the amount of money set aside in the pension fund is sufficient to cover all future pension obligations, including interest payments. This means that the pension can be paid out without the need for additional contributions from the sponsor, and that all promised benefits have been secured for the retirees. Option A is incorrect because the Pension Benefit Guaranty Corporation (PBGC) is not always involved, and it does not guarantee full benefit payments. Option C is also incorrect because it refers to the yield on the pension fund, which may be higher or lower than the inflation rate depending on the investment strategy. And finally, option D is misleading because in many cases, the employer contributions exceed the employee contributions, particularly for defined benefit plans.

A Fully Funded Pension Liability Is One in Which