Advanced Funded Pension Plan

AAA

DEFINITION of 'Advanced Funded Pension Plan'

A pension plan that is funded concurrently with the employee's accrued benefits, such that the funds are set aside well before the employee's retirement. Advanced funded pension plans are generally defined contribution plans, and are fully funded. They can be funded by the employer alone, or by some combination of the employer and the employee.

INVESTOPEDIA EXPLAINS 'Advanced Funded Pension Plan'

In contrast to an advanced funded pension plan, an unfunded pension plan uses actuarial assumptions to determine the periodic contributions it makes to the plan. Defined benefit plans are more difficult to fund in advance because there are so many variables in computing the funding necessary to produce the benefit.

RELATED TERMS
  1. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  2. Pension Fund

    A fund established by an employer to facilitate and organize ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  5. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
  6. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
Related Articles
  1. Pension Plans: Pain Or Pleasure?
    Retirement

    Pension Plans: Pain Or Pleasure?

  2. Keeping Track Of Retirement Plan Assets
    Retirement

    Keeping Track Of Retirement Plan Assets

  3. An Overview Of The Pension Benefit Guaranty ...
    Retirement

    An Overview Of The Pension Benefit Guaranty ...

  4. The Demise Of The Defined-Benefit Plan ...
    Budgeting

    The Demise Of The Defined-Benefit Plan ...

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center