Unfunded pension plan

Unfunded pension plan

Provides for the employer to pay out amounts to retirees or beneficiaries as and when they are needed. There is no money put aside on a regular basis. Instead, it is taken out of current income.

Unfunded Pension Plan

A pension plan where a former employer pays pensioners out of current income. That is, the employer does not place money aside or invest funds on a regular basis to finance the pension. Obviously, an unfunded pension carries higher risk for both the pensioner and the employer; if the company goes through a difficult period, the pensioner may not have a pension for all his/her retirement while the employer has higher current liabilities.
References in periodicals archive ?
Government employees who are not covered under the BPOPF are covered under the unfunded pension plan, which is financed from government revenues.
But one of LTD's most vocal critics said the district's outlook is dire given unfunded pension plan liabilities and the cost to add the west Eugene EmX route.
Credit rating agency Moody's has upgraded British Airway's bonds to Baa3, citing the improvement in the company's operating performance in spite of volatile earnings, and the beginning of the company's plan to reduce its significant unfunded pension plan.
4 billion unfunded pension plan and payments to IPPs for capacity availability over the next 25 years.
This has left some states with seriously unfunded pension plans and no good options to make catch-up payments.
At the start of 2006, according to The Wall Street Journal's Ian McDonald, the collective unfunded postretirement healthcare liability for Standard & Poor's (S & P) 500 firms was $321 billion, more than twice the unfunded pension plans for these firms ("Health Benefits Ail as Pensions Heal," June 6, 2006).
In unfunded pension plans, the sponsoring employer sets aside money for payment of benefits in the period the money is disbursed to the retiree.