What does the term "overfunded pension plan" refer to?

The term "overfunded pension plan" indeed refers to a pension plan that has more assets than liabilities. This situation implies that the plan has sufficient funds on hand to cover its future payout obligations to retirees. An overfunded status is typically seen as favorable because it indicates that the pension plan is well-managed and that the employer has made sufficient contributions or that the plan's investments have performed well over time.

In contrast, having no investments is not related to the concept of being overfunded, as a sustainable pension plan should have investments to grow its assets. Investing in real estate can be a part of a pension plan's asset allocation strategy, but it does not define what an overfunded plan is. Similarly, a pension plan at risk of bankruptcy generally indicates financial distress and would not be considered overfunded, as it would mean liabilities exceed or are close to exceeding assets. Thus, identifying a pension plan as overfunded is integral to understanding its financial health and ability to meet its long-term obligations.