Here is how it works. Pensions have assets and liabilities.  The assets are pretty straightforward as you point out.  The liabilities are a forecast of the amount of money the plan would need to have today if that money compounded at the a special bond rate so that they could cover all forecast pension payments.  The special rate is often a combination of real and nominal bond yeilds to take into account inflation in payouts to pensioners.

The net deficit or surplus of the plan is the value of the assets minus the liabilities.  This is the number that is coming up towards zero or 100% funded.

The financial crisis was a disaster for pensions as rates went down meaning liabilities went up.  Assets went down too.  In the US state pensions went to as little as 60% funded.  It was not as bad in Canada.

With the rise in rates the money needed today for future payouts lessons.  

Net pension liabilities are a big piece of government obligations often not included in deficit projections.