What is the pension funding ratio?

Funding ratio = market value of plan assets divided by present value of accrued benefit obligations. A ratio of 100% means fully funded. Below 100% means underfunded; above 100% means overfunded.

What discount rate is used to value pension liabilities?

Public pension plans commonly use expected return on assets (often 7-8%). Private pensions use corporate bond yield curves under ASC 715 (US GAAP) or IAS 19 (IFRS). The discount rate choice dramatically affects reported liability.

What is the difference between ABO and PBO?

Accumulated Benefit Obligation (ABO): benefits earned to date at current salary. Projected Benefit Obligation (PBO): benefits earned to date projected at expected future salary. PBO is larger and used under ASC 715.

What is the GASB 67/68 funded status for public plans?

GASB 67 requires public pension plans to report net pension liability (NPL) on the balance sheet. NPL = total pension liability minus fiduciary net position. Underfunded plans with NPL create balance sheet liabilities.

What triggers mandatory contributions for underfunded plans?

Under ERISA/PPA, private pension plans below 80% funded face benefit restrictions. Plans below 60% must freeze accruals. Minimum required contributions are calculated under IRC Section 430 to reach and maintain funding targets.

Pension Funding Ratio Calculator

Calculate pension fund funding ratio: assets divided by present value of liabilities. A ratio above 100% is fully funded. Calculate Actuarially Accrued Liability (AAL) and market value vs smoothed actuarial value of assets.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate pension fund funding ratio: assets divided by present value of liabilities. A ratio above 100% is fully funded. Calculate Actuarially Accrued Liability (AAL) and market value vs smoothed actuarial value of assets. Use the pension funding ratio result to inform your calculation.

Related Calculators

UK Pension Allowance

Finance

RMD Calculator

Finance & Accounting

Safe Withdrawal Rate