funded status

Definition

The difference between a pension plan's assets and its obligations, revealing whether there's enough money to pay promised benefits or whether future employees will be holding the bag. Spoiler: there's usually not enough.

Example Usage

The company's pension plan showed a funded status of only 75%, meaning a $500 million shortfall that keeps the CFO awake at night.

Origin

Pension accounting terminology distinguishing between overfunded and underfunded plans.

Fun Fact

Funded status is incredibly sensitive to discount rate assumptions—lower rates can instantly create billions in unfunded liabilities by increasing present value of obligations.

Source: FASB ASC 715 - Pension Accounting

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