Allocated Funding Instrument


Definition of "Allocated funding instrument"

Jeff Woda real estate agent
Jeff Woda Coldwell Banker Residential Brokerage - Ridgefield

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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