funded status investment & finance definition

The amount by which a pension plan’s assets exceed the plan’s projected benefit obligations (the amount the plan will have to pay in the future). The funded status is important because it forecasts whether or not the plan is fully funded. A fully funded pension plan is one in which the market value of the plan’s assets is enough to cover at least 100 percent of current benefits earned by employees. The pension plan’s funded status also is important because it impacts the magnitude of off-balance sheet liabilities that the company will eventually have to pay.