funded pension plan

A pension plan in which there are sufficient funds to pay for all liabilities. Both contributions from participants and earnings on investments provide cash to cover the plan’s liabilities. Funded pension plans are relatively easy to achieve during periods of rising markets. However, during a bear market, the situation is much different, and companies may have to provide additional capital to fund their pension plans. The Pension Guaranty Corp. guarantees pension plans and can make a company contribute additional funds to an under-funded pension plan.