If the plan gets overfunded, do we say it’s worsening? or it’s worsening when underfunded?
Underfunded is worse than overfunded.
That’s what I assume. But a chunk from Kaplan, and regarding the total periodic pension costs, says: “the expense is either paid via contributions or deferred via a worsening of the plan’s funded status”. As I understand, to defer the expense we need overfunded, not underfunded. Then overfundede = worsneing of the planfunded status!??
You can defer the expense whether the plan is overfunded or underfunded.
Deferring the expense simply means that you don’t make your payment this year, so the plan has less in assets than it would have otherwise.
This topic is probably the most confusing one that I came across whether in L1 or L2! I think I need to reread and workout more problems. Thanks for your reply.
My pleasure.