unfunded pensions

Unfunded pensions are retirement plans where the government or employer has committed to paying future benefits to retirees but hasn't set aside enough money today to cover those promises. Instead, these obligations are paid out as they come due, often funded by current workers’ contributions or government revenue. This approach relies on the assumption that future workers and funds will be available to meet these commitments, which can create financial risks if income sources shrink or expenses increase. Essentially, unfunded pensions are future promises to retirees that are not fully backed by designated assets today.