Legacy costs is a term formed by analogy with the computer industry's legacy systems. Legacy costs are those incurred by an organization (whether corporation or city) in prior years under different leadership or when the entity's priorities and resources were different. While it can refer to other commitments (particularly existing infrastructure) as well, it primarily refers to obligations to pay health care costs and pensions under defined-benefit plans for current employees and retirees, usually incurred during the labor peace era after World War II.
Legacy costs is a concept akin to computer systems from the past. These are expenses an organization (corporation or city) has in earlier years due to different leadership or resource allocation. Although it can involve other commitments, such as infrastructure, it primarily refers to healthcare and pension obligations under defined-benefit plans for current employees and retirees, usually stemming from the labor peace era after World War II.