Pension Shortfall

A pension shortfall occurs when there is not a sufficient amount of money in the pension plan to cover the obligations to the employees of the company. When a defined benefit plan is set up, employees of a company are told that they will receive a specific amount of money for a fixed number of years of service. When employees reach the appropriate number of years, they are supposed to be able to get a fixed benefit. However, during a pension shortfall, there will not be enough money from the plan to pay for the retirement benefits of the employees.