Final answer:
In a multi-employer plan, a balanced funding arrangement is in place when one government's pension is fully funded and another participating government's pension is underfunded. This arrangement ensures fairness and stability within the plan.
Step-by-step explanation:
In a multi-employer plan, when one government's pension is fully funded and another participating government's pension is underfunded, a balanced funding arrangement is in place.
A balanced funding arrangement is a plan that ensures that each participating employer's pension funding status is taken into account when determining the overall funding status of the plan. In this arrangement, the surplus funds from the fully funded pension can be used to offset the underfunded pension of the other government.
This approach helps to ensure that all participating governments contribute proportionally based on their individual funding levels, promoting fairness and stability within the multi-employer plan.