Allocated Funding Instrument

Definition of "Allocated funding instrument"

Pamela  Coleman real estate agent
Pamela Coleman, Real Estate Agent The Gates Real Estate Group

Insurance or annuity contract used in pension plans to purchase increments of retirement benefits through contributions for each employee paid into a fund. Benefits are guaranteed to employees at retirement; the insurance company is legally obligated to pay all benefits for which it has received premiums. Pension plans, in which no funds are available to purchase benefits prior to retirement involve unallocated funding instruments (benefits were not purchased at the time premium payments were made).


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