What Is an Annual Funding Notice (AFN)?

Research. Education. Perspective.

An Annual Funding Notice, or AFN, is the yearly funding disclosure that covered defined benefit pension plans provide under ERISA.^[1][4]

It gives participants and other required recipients a plan-level view of the pension's financial condition.

A current notice can contain information about:

• funded percentage
• plan assets
• plan liabilities
• participant and beneficiary counts
• funding policy
• investment policy
• asset allocation
• average return on plan assets
• events having a material effect on assets or liabilities
• PBGC pension-insurance information
• Form 5500 access
• special multiemployer funding status, when applicable.^[1][2][3][4]

The AFN is particularly important because a defined benefit pension does not work like a 401(k).

A 401(k) participant can usually see an individual account balance.

A traditional pension instead promises a benefit under a formula, while the plan maintains pooled assets intended to fund benefits for many participants.

The Annual Funding Notice helps answer:

"How well funded is the pension plan as a whole?"

It does not answer:

"Exactly how much is my personal pension worth?"

That distinction is the foundation for reading the notice correctly.

Key Takeaways

• Covered defined benefit pension plans generally provide an Annual Funding Notice every year.^[1][4]
• The requirement applies to covered single-employer and multiemployer defined benefit plans.^[1]
• Receiving the notice does not mean the pension is terminating.^[2][3]
• Required recipients generally include participants and beneficiaries receiving benefits, along with other parties specified by ERISA.^[4]
• Large plans generally furnish the notice within 120 days after the end of the plan year.^[1][4]
• Qualifying small plans generally use a special deadline tied to the earlier of:
• the date the Form 5500 annual report is actually filed
• the latest date the annual report could be timely filed, including extensions.^[1][4]
• SECURE 2.0 changed the AFN rules for plan years beginning after December 31, 2023.^[1]
• For current single-employer AFNs, the headline funded percentage generally compares:
• fair-market value of plan assets on the last day of the plan year
• with year-end plan liabilities determined using the applicable market-related interest assumption.^[1][2]
• That current single-employer presentation replaced the older headline use of the funding target attainment percentage, or FTAP, for AFN purposes.^[1]
• The AFN generally shows the notice year and the two preceding years so participants can evaluate the trend.^[1][2][3]
• A pension's funded percentage is not:
• the participant's investment return
• the percentage of the participant's benefit guaranteed by PBGC
• a forecast of the percentage of promised benefits the participant will receive.
• Multiemployer AFNs can contain additional information about endangered, critical or critical-and-declining status and applicable funding-improvement or rehabilitation measures.^[3]
• PBGC guarantee information is important but subject to separate rules and limits that differ between single-employer and multiemployer plans.^[2][3]

AFN in One Sentence

> ROIStreet Definition > > An Annual Funding Notice is the yearly ERISA disclosure that explains the funding status and financial condition of a covered defined benefit pension plan using plan-level asset, liability, demographic, investment and pension-insurance information.

The notice is informational.

It is not a bill.

It is not a distribution election.

And receiving it does not mean the plan is about to fail.

Why Defined Benefit Plans Need a Funding Notice

A traditional defined benefit pension promises a formula-based benefit.

For example, a benefit can depend on:

• years of service
• compensation
• benefit multiplier
• retirement age
• payment form

The plan then holds pooled assets to support those promised benefits.

That creates two large financial sides.

Assets

Money and investments held by the pension plan.

Liabilities

The measured present value of pension benefits owed under the applicable actuarial framework.

Pension funding analysis compares those two sides.

Funded Percentage

The Annual Funding Notice uses a funded percentage to help readers understand the relationship between pension assets and liabilities.^[1][2][3]

The simplified concept is:

Funded percentage = plan assets ÷ plan liabilities

If a single-employer pension has:

• assets: $950 million
• liabilities: $1 billion

then the simplified funded percentage is:

$950M ÷ $1,000M = 95%

That means the measured plan assets equal about 95% of the measured plan liabilities under the notice's applicable methodology.

It does not mean each participant receives 95% of the pension formula.

Worked Example: 95% Funded

Assume a participant has earned a pension expected to pay:

$3,000 per month

under the plan's terms at the relevant retirement age.

The AFN says the pension is:

95% funded

The participant should not multiply:

$3,000 × 95% = $2,850

and conclude that $2,850 is the expected benefit.

That is not what the funded percentage means.

The participant's accrued benefit is determined under:

• the plan formula
• service
• compensation
• vesting
• retirement timing
• payment form

The funded percentage is a plan-level financing measure.

A 100% Funded Pension Is Not Risk-Free

A pension can be:

100% funded

at one measurement date and have a different funded percentage later.

Why?

Because assets and liabilities move.

Possible asset changes include:

• investment gains
• investment losses
• employer contributions
• benefit payments
• expenses

Possible liability changes include:

• interest-rate changes
• actuarial assumption changes
• participant aging
• service accruals
• benefit amendments
• demographic experience
• retirements
• deaths

Funding status is a snapshot within an ongoing system.

Funding Status Is Not Investment Return

A pension can earn a positive investment return and become less well funded.

It can also earn a weak return and become more well funded.

That happens because the denominator—liabilities—can change.

Example

Assume:

• pension assets rise 4%
• pension liabilities rise 9%

Funding can worsen even though investments made money.

Or:

• assets fall 2%
• liabilities fall 8%

Funding can improve even though investment performance was negative.

This is why the AFN should be read as:

assets relative to liabilities

not:

investment scorecard

What SECURE 2.0 Changed

Section 343 of SECURE 2.0 changed the Annual Funding Notice requirements beginning with plan years after December 31, 2023.^[1]

The Department of Labor issued Field Assistance Bulletin 2025-02 to address the statutory changes while the older regulation is being reconciled with the amended law.^[1]

The changes particularly affect single-employer defined benefit pensions.

The Old Single-Employer AFN Presentation

Before the SECURE 2.0 changes, a single-employer AFN prominently used measures tied to the pension's minimum-funding framework, including:

• funding target attainment percentage — FTAP
• actuarial value of assets
• actuarial liabilities at the valuation date.^[1]

Those numbers were useful for minimum-funding law.

But Congress changed the participant disclosure framework.

The Current Single-Employer AFN Presentation

Beginning with the 2024 notice year for affected plans, the single-employer AFN generally uses a year-end presentation.^[1][2]

The funded percentage now compares:

Numerator

Fair-market value of plan assets on the last day of the plan year

Denominator

Present value of plan liabilities as of the last day of the plan year

using the specified market-related interest assumption and other applicable actuarial assumptions.^[1][2]

This is a different measurement framework from the old AFN headline FTAP.

Why Year-End Measurement Matters

The timing difference can materially change the number.

Old minimum-funding measures commonly relied on a valuation date near the beginning of the year.

The current single-employer AFN focuses on the plan's financial position at:

year-end

That gives participants a more direct year-end snapshot.

The Notice Shows Three Years

The current model notice displays the funded percentage for:

• notice year
• one preceding plan year
• two preceding plan years.^[2][3]

This helps the reader see direction.

For example:

The trend suggests the measured funding position improved.

But the table alone does not explain why.

A Better Three-Year Analysis

If funded percentage changes, ask:

1. Did assets rise or fall?
2. Did liabilities rise or fall?
3. Were major contributions made?
4. Were substantial benefits paid?
5. Did interest-rate assumptions change?
6. Did the plan amend benefits?
7. Did the participant population change?
8. Did a material event occur?

The AFN provides several of these clues.

Year-End Assets

For a current single-employer AFN, the model uses the fair-market value of plan assets at the last day of the relevant plan year.^[2]

Fair-market value is a point-in-time asset measure.

It can reflect investments such as:

• public equity
• private equity
• bonds
• cash
• real estate
• pooled investment vehicles
• other plan assets

depending on the pension's portfolio.

Liabilities Are Present Values

A pension liability is not simply:

next year's pension checks

It is an actuarial present-value measure of promised benefits.

The calculation can depend on:

• expected benefit payments
• mortality assumptions
• retirement patterns
• interest rates
• other actuarial assumptions

The current single-employer AFN uses the liability methodology specified under the amended disclosure framework.^[1][2]

That means liabilities can change even if no participant's pension formula changes.

Interest Rates and Pension Liabilities

Present-value mathematics generally creates an inverse relationship between discount rates and measured liabilities.

All else equal:

• higher discount rate → lower present value
• lower discount rate → higher present value

This means interest-rate movements can materially affect a pension funded percentage.

That is one reason funding status should not be interpreted solely as an investment-management result.

Participant and Beneficiary Information

Current AFNs include demographic information for:

• notice year
• two preceding years.^[1][2][3]

The model tables separate groups such as:

• participants currently employed
• participants and beneficiaries receiving benefits
• participants and beneficiaries entitled to future benefits but not yet receiving them.^[2][3]

This can help readers understand how the pension population is evolving.

Why Demographics Matter

Consider two plans with identical assets and liabilities.

Plan A

Mostly active workers.

Plan B

Mostly retirees already receiving benefits.

Their future cash-flow patterns can differ materially.

Demographic information adds context to the funding numbers.

Current-Year Estimates for Large Plans

DOL's current enforcement guidance permits a large plan, in specified circumstances, to use a reasonable, good-faith estimate of participant and beneficiary counts for the notice year.^[1]

However, the preceding two years generally use actual year-end counts.

If the current-year numbers are estimates, the notice should say so under the model framework.^[1][2][3]

Small Plans Use Actual Current-Year Data

Qualifying small plans receive extra time to prepare the AFN.

Under the current DOL guidance, a small plan relying on that delayed deadline generally must use actual demographic data for the notice year rather than an estimate.^[1]

This is a useful detail when comparing notices.

Who Must Receive an AFN?

DOL's reporting and disclosure guidance identifies recipients including:^[4]

• participants
• beneficiaries receiving benefits
• alternate payees receiving benefits
• labor organizations representing participants under the plan
• PBGC
• and, for multiemployer plans, specified contributing employers

The precise recipient rules depend on the plan and ERISA.

Large-Plan Deadline

For large plans, the ordinary AFN deadline is:

within 120 days after the end of the plan year.^[1][4]

For a calendar-year plan:

• plan year ends December 31
• 120th day ordinarily falls April 30

So a calendar-year large plan generally furnishes the prior-year AFN by:

April 30

subject to the applicable rules.

Small-Plan Deadline

Qualifying small plans use a different timing rule.^[1][4]

The AFN generally must be provided no later than the earlier of:

1. the date the plan administrator actually files the Form 5500 annual report, or
2. the latest date the annual report may be timely filed, including extensions.

This can give the small plan much longer than 120 days to finalize year-end information.

What Counts as a Small Plan for AFN Timing?

DOL's disclosure guide describes the AFN small-plan rule generally by reference to a plan with:

100 or fewer participants on each day during the plan year preceding the notice year.^[4]

This is a specialized funding-notice definition.

Do not automatically import the defined contribution Form 5500 counting method into the pension AFN timing rule.

Funding Policy

The Annual Funding Notice summarizes the pension's:

funding policy.^[2][3]

The funding policy addresses how the plan intends to fund promised benefits.

It should not be confused with:

• an individual participant contribution election
• the plan's investment allocation
• the funded percentage itself

Funding and investing are connected but distinct.

Investment Policy

The current DOL models also describe the plan's investment policy.^[2][3]

The investment policy establishes guidelines for managing pension assets.

A pension portfolio can hold a mix such as:

• public equity
• private equity
• investment-grade debt
• high-yield debt
• cash
• real estate
• other investments.^[2][3]

The notice can show the plan's asset allocation.

Asset Allocation

The AFN can report percentages across investment categories.

Example:

• public equity: 35%
• private equity: 10%
• investment-grade debt: 30%
• high-yield debt: 5%
• real estate: 10%
• cash: 5%
• other: 5%

Total:

100%

This tells the participant something about how pension assets are invested.

It does not tell whether the allocation is appropriate for the plan without additional context.

Average Return on Assets

The current DOL model notices include an average return on assets for the plan year.^[2][3]

This is useful, but it should not be confused with:

• funded percentage
• personal investment return
• change in pension liabilities

A pension can report a strong average asset return and still have funding pressure if liabilities rise faster.

Worked Example: Return Is Positive but Funding Falls

Assume:

Start

• assets: $900 million
• liabilities: $950 million
• funded percentage: about 95%

During the year:

• pension assets earn a positive return
• assets finish at $940 million
• liabilities rise to $1.02 billion

New funded percentage:

$940M ÷ $1.02B ≈ 92%

Investment return was positive.

Funding still declined.

Events Having a Material Effect on Assets or Liabilities

The AFN can require an explanation of known events that materially affect plan assets or liabilities in the current year following the notice year.^[2][3]

Examples can include:

• benefit amendment
• scheduled benefit increase
• benefit reduction where legally permitted
• plan freeze
• corporate transaction
• large contribution
• significant workforce event
• another material plan change

The point is to tell participants when a known development can materially change the pension's financial position.

Liability Effect Estimate

Under the current model, if an event has a material effect on liabilities, the notice can state an approximate dollar increase or decrease associated with that event.^[2][3]

That can make a material plan amendment more understandable than a generic statement that "liabilities changed."

Corporate and Actuarial Information Filed With PBGC

For certain single-employer plans, additional financial and actuarial information may have to be reported to PBGC under separate federal requirements.

The current single-employer model AFN explains this when applicable.^[2]

This is generally associated with specified funding conditions under PBGC's reporting framework.

The existence of such reporting should be read carefully rather than treated as proof that termination is imminent.

PBGC Information

The AFN includes information about the Pension Benefit Guaranty Corporation.^[2][3]

PBGC is the federal agency that insures benefits in many private-sector defined benefit pension plans.

But two limitations matter.

Not every pension is PBGC-covered

Government plans and certain other plans are outside PBGC coverage.

PBGC does not guarantee every promised dollar

Guarantees are subject to:

• statutory limits
• plan type
• benefit type
• timing
• participant age
• payment form
• other federal rules

Single-Employer vs. Multiemployer PBGC Programs

PBGC operates different insurance programs for:

• single-employer plans
• multiemployer plans

The guarantee structures and maximums are not interchangeable.

A participant should use the PBGC information for the correct plan type.

Funded Percentage Is Not PBGC Coverage Percentage

Suppose a plan is:

85% funded

That does not mean PBGC guarantees the remaining:

15%

And it does not mean PBGC guarantees:

85%

of every participant's benefit.

PBGC guarantee calculations are separate from the AFN funded percentage.

Single-Employer vs. Multiemployer AFNs

Both notice types serve the same broad purpose:

annual pension funding transparency

But the funding systems differ.

Single-employer pension

Typically sponsored by one employer or controlled employer group.

Multiemployer pension

Maintained under collective bargaining with multiple contributing employers.

Those structural differences produce different funding rules and disclosure elements.

Multiemployer Funded Percentage

The current DOL multiemployer model uses the plan's applicable actuarial asset and accrued-liability framework for its funded percentage.^[3]

The calculation is therefore not identical to the revised year-end single-employer methodology.

This is an important post-SECURE 2.0 distinction.

Do not compare a single-employer percentage and multiemployer percentage as though the measurement rules were identical.

Year-End Fair-Market Assets for Multiemployer Plans

The multiemployer model also provides year-end fair-market value information to add context to the actuarial funding calculation.^[3]

Actuarial asset values can smooth market fluctuations.

Fair-market values provide a more immediate point-in-time market view.

Both can be informative.

Endangered Status

A multiemployer plan can be classified as:

endangered

under the applicable federal funding rules.

The current DOL model describes an endangered plan generally as one whose funded percentage is below specified thresholds and requires funding-improvement action.^[3]

The actual statutory classification can involve detailed rules.

The AFN should state the plan's applicable status.

Critical Status

A multiemployer plan can also be in:

critical status

based on federal distress criteria.

The plan generally must implement a rehabilitation plan under the applicable framework.^[3]

The AFN can summarize that status and the corrective structure.

Critical and Declining Status

A multiemployer plan can be designated:

critical and declining

when it is in critical status and projected to become insolvent within the applicable statutory horizon.^[3]

This is a materially different condition from simply being below 100% funded.

The notice can include:

• projected insolvency information
• rehabilitation-plan information
• legally permitted corrective actions
• related participant disclosures.^[3]

Special Financial Assistance

Certain financially troubled multiemployer pensions received or can qualify for Special Financial Assistance, or SFA, under the American Rescue Plan Act framework.

DOL's Field Assistance Bulletin 2023-01 provides additional AFN guidance for applicable plans.^[7]

A plan that received SFA can therefore have extra funding-notice disclosures beyond the ordinary model language.

Why SFA Can Make the Numbers Look Counterintuitive

DOL guidance explains that the actuarial funded percentage for certain multiemployer plans does not necessarily include the SFA account in the same way as year-end fair-market asset disclosures.^[7]

A participant can therefore see:

• a funded percentage that appears lower than expected
• while fair-market assets include SFA money

The notice may need explanatory language so the two measurements are not confused.

AFN vs. Summary Annual Report

INV-070 explains the Summary Annual Report.

The distinction is:

Annual Funding Notice

Focuses on:

defined benefit pension funding and financial condition

Summary Annual Report

Summarizes:

annual Form 5500 financial information for plans subject to the SAR requirement

Defined benefit plans subject to the AFN framework generally do not also use the ordinary SAR in the same way.^[4][5]

AFN vs. Form 5500

The AFN is a participant disclosure.

Form 5500 is the broader annual federal filing.

The AFN can tell participants how to obtain the plan's Form 5500.^[2][3]

The Form 5500 can provide:

• financial schedules
• actuarial schedules
• service-provider information
• participant counts
• plan-level reporting
• attachments

INV-069 explains Form 5500 in detail.

AFN vs. Individual Pension Benefit Statement

These documents answer different questions.

AFN

How is the pension plan funded?

Individual benefit statement

What benefit have I personally earned or accrued?

The AFN does not ordinarily list the participant's personal accrued pension benefit.

A participant with a question about the personal benefit should review:

• pension benefit statement
• benefit estimate
• SPD
• plan records

rather than trying to derive the benefit from the funded percentage.

AFN vs. SPD

The Summary Plan Description explains:

• pension eligibility
• benefit formula
• vesting
• normal retirement age
• early retirement
• payment forms
• survivor rights
• claims procedures

The AFN explains:

• funding status
• assets and liabilities
• investment/funding policy
• plan demographics
• PBGC information

The SPD is the rulebook summary.

The AFN is the annual funding snapshot.

Does the AFN Tell You Whether a Pension Is Safe?

Not with a single number.

A pension's financial resilience depends on more than current funded percentage.

Relevant factors can include:

• sponsor financial strength
• contribution policy
• plan maturity
• asset allocation
• liability structure
• interest-rate exposure
• benefit cash flows
• plan amendments
• PBGC coverage
• multiemployer contribution base
• broader legal framework

The AFN is a valuable starting document.

It is not a complete risk rating.

A Pension Funding Review Framework

Use six questions.

1. What type of pension is this?

Single-employer or multiemployer?

2. What methodology is being shown?

Current single-employer year-end measure?

Multiemployer actuarial funded percentage?

3. What is the three-year trend?

Look at both assets and liabilities.

4. What changed?

Review:

• investment return
• contributions
• material events
• demographics
• liabilities

5. What does PBGC information say?

Identify the correct insurance program and limitations.

6. What additional records are needed?

Consider:

• Form 5500
• actuarial Schedule SB or MB
• SPD
• personal benefit statement
• rehabilitation or funding-improvement plan
• other plan notices

Worked Example: Assets Rise but Funding Declines

Assume a single-employer pension reports:

Year 1

• assets: $900M
• liabilities: $950M
• funded: 95%

Year 2

• assets: $940M
• liabilities: $1.02B
• funded: 92%

Assets rose by:

$40 million

Yet funding declined.

The liability increase was larger.

The correct conclusion is not:

"The investments lost money."

The correct conclusion is:

"The relationship between assets and liabilities deteriorated."

Then investigate why.

Worked Example: Funding Improves With Flat Assets

Assume:

Year 1

• assets: $800M
• liabilities: $900M
• funded: 89%

Year 2

• assets: $800M
• liabilities: $840M
• funded: 95%

Assets did not increase.

Funding improved because measured liabilities fell.

This can occur because of:

• interest-rate changes
• demographic changes
• actuarial changes
• benefit cash flows
• other factors

Worked Example: Calendar-Year Large Plan

Assume:

• plan year ends December 31, 2026
• plan is not a qualifying small plan

Ordinary 120-day AFN deadline:

April 30, 2027

The notice can arrive well before the plan's Form 5500 annual filing deadline.

That is one reason large plans can be permitted limited estimation of current-year demographic data under DOL's current guidance.^[1]

What If You Never Receive an AFN?

If the participant believes the pension is subject to ERISA's AFN rules:

1. confirm it is a defined benefit pension
2. identify the plan year
3. determine whether the plan is large or qualifies for the small-plan timing rule
4. check the participant's email and benefits portal
5. contact the plan administrator
6. request the current AFN

DOL's Employee Benefits Security Administration provides participant assistance for ERISA disclosure issues.

Can the AFN Be Electronic?

Retirement-plan disclosures can be furnished electronically when the plan satisfies applicable Department of Labor electronic-disclosure rules.

Depending on the delivery framework, the participant can have rights involving:

• access to the document
• paper copies
• opt-out procedures
• notice of electronic availability

A participant should not assume a notice was never sent solely because no paper envelope arrived.

The Notice Is Informational

The current DOL model makes a useful point:

The AFN is informational; the recipient does not need to respond merely because the notice arrived.^[2][3]

This helps prevent a common reaction.

Receiving the AFN does not mean:

• benefits are being cut
• the plan is terminating
• action is required
• the participant must make an election

Read the document first.

Common AFN Mistakes

Treating funded percentage as a personal benefit percentage

It is not.

Treating 100% funded as permanent

Funding changes over time.

Calling funded percentage investment return

Liabilities also move.

Comparing single-employer and multiemployer percentages without checking methodology

The funding frameworks differ.

Using an old FTAP framework for current single-employer notices

SECURE 2.0 changed the participant disclosure presentation.

Assuming the AFN means the plan is in distress

The notice is annual and required regardless of funding status.

Assuming PBGC guarantees every dollar

Guarantee rules and limits apply.

Ignoring the three-year trend

One year can be unusual.

Ignoring material-event disclosures

A plan amendment or corporate event can explain a significant change.

Trying to find a personal accrued benefit in the AFN

Use the participant benefit statement or plan estimate.

Frequently Asked Questions

What is an Annual Funding Notice?

It is the annual ERISA disclosure that provides funding and financial-condition information for covered defined benefit pension plans.^[1][4]

Does every 401(k) receive an AFN?

No. The AFN is primarily a defined benefit pension disclosure. A 401(k) is generally a defined contribution plan and uses other annual and periodic disclosures.

Why did I receive an Annual Funding Notice?

Because covered defined benefit pension plans generally must furnish the notice every year to required recipients. Receiving it does not mean the plan is terminating.^[2][3]

When is the AFN due?

Large plans generally furnish it within 120 days after the end of the plan year. Qualifying small plans use a special deadline tied to Form 5500 filing timing.^[1][4]

What is the funded percentage?

It is a plan-level comparison of assets with liabilities under the applicable AFN methodology.

Does 90% funded mean I get 90% of my pension?

No. Your pension benefit is determined under the plan's benefit formula and rules. The funded percentage measures the plan's aggregate financial position.

What changed under SECURE 2.0?

For plan years beginning after December 31, 2023, SECURE 2.0 revised Annual Funding Notice requirements. Among the major changes, single-employer AFNs moved away from the old FTAP headline presentation toward year-end fair-market assets and year-end liabilities using the amended statutory methodology.^[1]

What happened to the old at-risk disclosure?

DOL guidance explains that SECURE 2.0 eliminated the prior special at-risk liability disclosure from the single-employer AFN beginning with the 2024 notice year.^[1]

Does the AFN show investment return?

The current DOL model includes an average return on plan assets, but that is different from the funded percentage and from any participant's personal investment return.^[2][3]

Does the AFN show my personal pension benefit?

No. Use your individual pension benefit statement, benefit estimate and plan records for personal accrued-benefit information.

What is the difference between single-employer and multiemployer AFNs?

They cover different pension structures and use different funding frameworks. Multiemployer notices can also include endangered, critical or critical-and-declining status information and related improvement or rehabilitation-plan disclosures.^[3]

What is critical and declining status?

It is a multiemployer-plan distress classification under federal law for a plan in critical status that is projected to become insolvent within the applicable statutory period.^[3]

What is PBGC?

PBGC is the federal pension-insurance agency covering many private defined benefit pension plans. Guarantee limits and rules differ for single-employer and multiemployer programs.

Is the AFN the same as the Summary Annual Report?

No. The AFN focuses on defined benefit pension funding. The SAR summarizes annual Form 5500 financial reporting for plans subject to the SAR requirement.

Can I get the pension's Form 5500?

Yes. The AFN includes information about obtaining the annual Form 5500, including through DOL's public filing system or the plan administrator.^[2][3]

Does the AFN certify that the pension is financially safe?

No. It is a disclosure document, not a government safety rating or guarantee of future funding.

The Bottom Line

The Annual Funding Notice is the defined benefit pension participant's annual window into:

assets + liabilities + demographics + investment policy + material events + pension insurance

Its most important number is often the funded percentage.

But that number should never be read in isolation.

A useful analysis asks:

• Is this a single-employer or multiemployer pension?
• What funding methodology applies?
• Are assets rising or falling?
• Are liabilities rising or falling?
• What does the three-year trend show?
• Did participant demographics change?
• Did a material event occur?
• What does the plan say about investment and funding policy?
• What PBGC program applies?
• What additional detail appears in Form 5500?

The most important interpretive rule is:

> A pension's funded percentage measures the plan's financial position. It does not directly calculate your personal pension benefit.

That distinction turns the AFN from a confusing compliance notice into a useful pension-research document.

Sources & References

1. U.S. Department of Labor: Field Assistance Bulletin 2025-02 — Annual Funding Notice Requirements Following SECURE 2.0
2. U.S. Department of Labor: Single-Employer Pension Plan Model Annual Funding Notice
3. U.S. Department of Labor: Multiemployer Pension Plan Model Annual Funding Notice
4. U.S. Department of Labor: Reporting and Disclosure Guide for Employee Benefit Plans
5. U.S. Department of Labor: What You Should Know About Your Retirement Plan
6. U.S. Department of Labor: Form 5500 Series
7. U.S. Department of Labor: Field Assistance Bulletin 2023-01 — Multiemployer Plans and Special Financial Assistance
8. Pension Benefit Guaranty Corporation: Understanding Your Pension and PBGC Coverage

Educational Disclaimer

ROIStreet publishes educational content intended to help readers understand defined benefit pension funding disclosures. Nothing in this article is personalized legal, actuarial, tax, investment or financial advice, or a determination that a particular pension plan is adequately funded, underfunded, financially safe, likely to terminate or able to pay every promised benefit. Pension funding depends on plan type, actuarial assumptions, assets, liabilities, contributions, demographics, plan terms, employer circumstances, PBGC rules and other facts.

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We strive to explain before we evaluate, present evidence before opinions, discuss risks alongside potential benefits, distinguish facts from analysis, and correct material errors transparently.

Our purpose is to help readers better understand investing—not to tell them what to do.