what constraints exist regarding the flexibility in using surplus funds in pension plans 
while overfunded pension plans provide flexibility constraints exist regarding the use of surplus funds legal and contractual obligations may impose restrictions on how surplus assets can be utilized for example there may be limitations on distributing surplus funds to shareholders or repurposing them for non pension related purposes the bottom linean overfunded pension plan occurs when the assets held by the plan exceed its present and future liabilities while providing financial stability and investment flexibility it introduces challenges such as tax implications regulatory scrutiny and the need for careful management to align with legal and fiduciary responsibilities 