|Unfunded pension scheme|
A pension scheme with no pension fund. The pensions of current beneficiaries are paid by a former employer out of current revenue or contributions by present employees, on a pay-as-you-go basis. Such pensions are safe only if the employer cannot become insolvent or cease to trade; this normally requires either state ownership or a state guarantee.
|Reference: Oxford Press Dictonary of Economics, 5th edt.|