unfunded liability

Definition

The amount, at any given time, by which future payment obligations exceed the present value of funds available to pay them. For example, a pension plan's payment obligations, including all income, death and termination benefits owed, are compared to the plan's present investment experience, and if the total plan obligations exceed the projected plan assets at any point in time, the plan has an unfunded liability.

Use unfunded liability in a sentence

The unfunded liability naturally carried an inherent risk however we were sure the demand would increase after marketing our project.

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The unfunded liability that the entire Social Security System represents is a very pressing issue for lawmakers and it seems almost impossible to resolve without slashing benefits.

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Based on revenue projections from the Social Security Administration and the fact that the very populous Baby Boomer Generation has begun to reach retirement age, the economist argued that the U.S. Social Security system would soon become an unfunded liability unless comprehensive reforms were made.

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