Unfunded Liability
Content
Definition
An Unfunded Liability is a liability, such as a pension plan benefit, that does not have assets set aside to fund the future payment.
Usage and Context
Unfunded liability is a future payment obligation, like a pension, without money set aside to cover it.
Frequently asked questions
- What does unfunded liability mean? Unfunded liability is a future financial obligation without enough assets saved to cover it, often seen in pensions.
- What is an unfunded pension plan? An unfunded pension plan is a retirement plan where the employer has not set aside funds to pay for future benefits, relying instead on future cash flows.
- Is pension liability a liability? Yes, pension liability is a liability, meaning the obligation to pay future pension benefits to employees.
Benefits
Unfunded liability points out future financial obligations, encouraging proactive asset management.
Conclusion
Unfunded liability points to future financial commitments that require proactive management.
