Explained: Unfunded Liabilities


Explained: Unfunded Liabilities

Unfunded Liabilities
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Overview

A liability is a future debt or performance obligation that one party owes to another at some future date in time. It is commonly settled through a payment or performance of a service.

An Unfunded Liability is used to describe any liability that does not have savings set aside for it. It can be calculated by determining the difference, at any point in time, by which future payment obligations exceed the expected future stream of funding.

In respect to governments, an unfunded liability is simply a future financial commitment that has not yet been paid for. By some accounts the Canadian government has well over a $1 trillion dollars in unfunded liabilities.

Two major unfunded liabilities in Canada are found in our health care system and pension plans.

To find out more about unfunded liabilities in Canada check out the following pages: