An underfunded pension refers to a retirement plan where the amount of money set aside for future payouts is not enough to cover the promised benefits. This can happen due to a variety of reasons, such as poor investment returns, increasing life expectancy of retirees, or inadequate contributions from the employer.
To determine if your pension is underfunded, you can look at the pension plan's funding ratio, which is the ratio of assets to liabilities. A funding ratio below 80% is generally considered to be underfunded. You can also check with your employer or pension provider for more information.
The Government Accountability Office (GAO) provides a comprehensive report on the funding status of state and local government pensions. You can also check with your state's pension agency for specific information on underfunded pensions in your state.
The Pension Benefit Guaranty Corporation (PBGC) is a federal agency that protects the retirement benefits of over 37 million workers in private sector pension plans. They provide information on underfunded pensions and offer resources for retirees and plan participants.
There are a few ways to address underfunded pensions, such as increasing contributions from the employer or employees, reducing benefits, or investing in higher-yielding assets. Ultimately, it is up to the employer or pension plan to take necessary steps to improve the funding status of the pension plan.