Variables designed to measure political costs were not found to be significant determinants Of funding ratios .
The funding ratio, which expresses the proportion between available assets and liabilities, illustrates the present financial status of a pension fund. To put it another way, it demonstrates if the pension fund has sufficient reserves to pay out pension benefits to both its current and future members.
Pension fund obligations are subtracted from assets to determine the funded state. The employer might be obliged to make additional contributions to the plan if the funded state of the plan dips below a specified threshold in order to restore the funding level.
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