Refers to a pension scheme where the fund's liabilities are not matched by its current assets. It may also refer to a loan facility which has not been fully drawn down or a cost/outgoing which has not been financed.
In relation to superannuation, describing a scheme in which the accrued benefits payable to members (ie. the liabilities of the fund) are not matched by the fund's current assets. Some Government superannuation funds have unfunded liabilities. (See also Fully Funded).