Question

give me an example of fully funded defined benefit plan

please dont use hand writing

Answer 1

First of all let's understand the difference between a funded and unfunded defined benefit plan:

Funded Defined Benefit Plan: A funded defined benefit plan means that the plan has enough assets of its own to meet its liabilities.

Unfunded Defined Benefit Plan: As opposed to the definition of a funded plan above, unfunded defined benefit plan refers to a plan which does not have enough income/assets to meet its libailities. It is the choice of an orginization as to whether to fund a defined benefit plan or not.

Example of Fully funded Defined Benefit plan:

One example of a fully funded defined benefit plan is a Fully funded defined "Pension" Plan.

Pension as we all know refers to the sum of money which is paid to the employee after his/her retirement. In order to meet the payment of pensions to its employees, an organization maintains a defined pension plan which may be funded or unfunded.

Fully funded defined pension plan is one which has enough assets and income of its own to meet its liabilities/obligations of making payment to retired employees in the forseeable future. Such assets/income is invested in varrious securities to maintain financial stability of the plan. Calculation of the amount of pension is made every year depending on the number of employees, their salaries etc. and accordingly new contributions are required to made into this plan each year depending on such calculations.  

Hence to summarize, we can say that a fully funded defined pension plan refers to a plan which has the ability to meet its current and future payment obligations and has financial stability.