Legacy Costs

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  2. Liability

    A company's legal debts or obligations that arise during the ...
  3. Pension Shortfall

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

    A type of retirement plan, usually tax exempt, wherein an employer ...
  5. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  6. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
Related Articles
  1. Fighting The High Costs Of Healthcare
    Home & Auto

    Fighting The High Costs Of Healthcare

  2. The Generation Gap
    Retirement

    The Generation Gap

  3. The Demise Of The Defined-Benefit Plan ...
    Budgeting

    The Demise Of The Defined-Benefit Plan ...

  4. Is Retirement Good For You Or Bad For ...
    Retirement

    Is Retirement Good For You Or Bad For ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center