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amount by which the reserve
balance is lower than one of the following reference
Below are two different examples to illustrate the concept of unfunded liability relative to a targe funding level.
There are a variety of techniques, or reinvestment formulas, for calculating the unfunded liability, which differ essentially in their interpretation of the base year relative to the placed in service year.
The underfunding is expressed either as a Dollar value or percentage of total capital load calculated over a planning horizon.
Listed below are some of the key attributes of an unfunded liability:
Listed below are some of the potential consequences of an unfunded liability, the severity of which will vary depending on the size of the funding backlog:
Included below are some asset management principles to consider in mitigation and control of the unfunded liability:
Fig. Graphical representation of unfunded liability (catch-up) relative to base year.
Fig. Spectrum of funding levels ranging from poor/weak ("red") at the left side to strong/good ("green"). The lower the current funding the higher the unfunded liability is likely to be.
Fig. Owners holding a special general meeting to raise additional funds resulting from a funding shortfall
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