A pension liability arises when pension expense exceeds pension funding.

Question

Quizplus · Accepted Answer

A pension liability occurs when a company's pension expenses (costs of providing the promised pension benefits to employees) exceed the funds that have been set aside or contributed to the pension plan to cover those costs. In other words, the company has promised more in pension benefits than it has funded, which creates a shortfall that must be addressed.

A Pension Liability Arises When Pension Expense Exceeds Pension Funding