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All of that work assumes that the underlying value of the firm is independent of its currentliability structure.
Under the special rule, a plan is considered underfunded if the value of its assets is less than 90 % of its currentliability.
In all cases, however, the additional required contribution cannot exceed the amount needed to bring assets up to 100 % of the currentliability.
The notion behind this view is that projected liability consists of two parts - currentliability and contingent benefits.
On the other hand, with a higher currentliability, firms offering a cash balance plan will be subject to higher minimum funding requirements.
During the late 1980s and 1990s, the introduction of the ' 150 % of currentliability ' funding limit had a significant impact.
The additional $6,000 is included in the projected liability but not in the currentliability.
Currentliability is less than the projected plan liability because it does not include the effect of future salary increases on the value of pension rights already earned.
Remember that currentliability is only part of the projected liability, since it does not account for the impact of future salary increases on benefits earned to date.
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