This monograph considers the funding of defined benefit (DB) pension plans and specifically the prefunding of DB pension plans rather than pay-as-you-go systems. It looks at some of the key questions that arise when considering how pension plans are funded and the role of actuaries in helping to answer these questions. It looks too at some of the key drivers for different approaches to pension plan funding. It uses the term pension plan to refer to the legal entity or arrangement that is used to deliver the pension benefit. This monograph is educational rather than representing any form of guidance. Any proposals made are subject to the relevant actuary’s judgement in the circumstances of a particular situation.
