Pension Plan Funding

Pension plan funding refers to the financial strategy used by employers to set aside money to pay future retirement benefits to employees. It involves calculating how much money will be needed based on factors like employee salary, longevity, and the plan’s investment returns. Employers must regularly contribute to the pension fund to ensure there are sufficient assets to fulfill these future obligations. Adequate funding is essential to protect employees' retirement security and is regulated by laws to ensure transparency and fiscal responsibility, preventing plans from becoming underfunded and jeopardizing benefits.