Underfunded pensions are primarily a problem with defined-contribution pension plans.

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Underfunded pensions are primarily a problem with defined-benefit pension plans, as these plans promise a specific level of retirement benefit to the employee regardless of how much has been contributed to the plan. In contrast, defined-contribution plans do not promise a specific benefit and the employee's retirement income is based on how much has been contributed to the plan over time, so there is less risk of underfunding.

Underfunded Pensions Are Primarily a Problem with Defined-Contribution Pension Plans