funding ratios

Funding ratios measure how well a pension plan or retirement fund can meet its future obligations. It compares the fund’s assets (the money it has) to its liabilities (the promised benefits). A funding ratio of 100% means the fund has exactly enough assets to cover all obligations. If the ratio is above 100%, the fund is well-funded; below 100%, it’s underfunded, meaning it may need additional contributions or adjustments to meet future payments. This ratio helps stakeholders assess the financial health and sustainability of pension plans.