Unfunded pension plan

(redirected from Unfunded Pension Plans)

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 ?
In unfunded pension plans, the sponsoring employer sets aside money for payment of benefits in the period the money is disbursed to the retiree.
Additionally, zero return rates were applied to unfunded pension plans for asset return calculations.