Definition of pension reversion

procedure initiated by a company with an overfunded defined benefit pension plan to terminate the plan and reclaim the surplus assets for itself. Pension beneficiaries continue to receive their benefits because the company replaces the pension plan with a life insurance company-sponsored fixed annuity plan. In some cases, the company will offer current employees a defined contribution pension plan to replace the terminated defined benefit plan. Employees are usually not pleased when their company carries out a pension reversion plan for two reasons: By replacing the pension plan backed by the company with a fixed annuity backed by an insurance company, pensioners are no longer covered by the guarantee of the Pension Benefit Guaranty Corporation; and pensioners lose the prospect for increased pension benefits that they might have enjoyed under the company's pension plan if it had achieved superior investment performance.