Legacy Costs


DEFINITION of 'Legacy Costs'

The costs involved with a company paying increased healthcare fees and other benefit-related costs for its current employees and retired pensioners. It is believed that escalating legacy costs can be a very large contributing factor towards limiting a company's competitiveness.

BREAKING DOWN 'Legacy Costs'

Typically, it is the larger, older and more established companies that have problems with spiraling legacy costs, because they have the most pension and healthcare liabilities. In the face of these costs, many companies are taking measures to lower legacy costs as much as possible. One example of this can be seen by the trend of companies changing their employee retirement plans from defined-benefit plans to defined-contribution plans.

  1. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  2. Pension Shortfall

    A situation in which a company offering employees a defined benefit ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Liability

    A company's legal debts or obligations that arise during the ...
  5. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  6. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
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