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.

BREAKING DOWN '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.

  1. Fully Funded

    A pension plan that has sufficient assets needed to provide for ...
  2. Current Service Benefit

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  3. Pension Shortfall

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  4. Accrued Monthly Benefit

    The earned pension benefit that will be paid to an employee at ...
  5. Pensionable Service

    The period of service, expressed in a yearly figure, for which ...
  6. Withdrawal Credits, Pension Plan

    The rights of an employee who has a qualified pension plan to ...
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  1. Who bears the investment risk in 401(k) plans?

    Who actually bears the investment risk in a pension plan depends on the type of pension plan that is employed. In a broad ... Read Answer >>
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