overfunded pension plan investment & finance definition

A pension plan in which the projected benefit obligations are smaller than the fair value of the plan assets. Overfunded pension plans don’t require a contribution from the corporation, and the amount by which they are overfunded can be added to the company’s bottom line as profit. In periods of increasing stock or fixed-income markets, a company’s pension plan and the corporate bottom line will be boosted, thanks to stock market gains.