Projected benefit obligation (PBO)

A measure of a pension plan's liability at the calculation date assuming that the plan is ongoing and will not terminate in the foreseeable future. Related: Accumulated benefit obligation.

Projected Benefit Obligation

An estimate of the present value of the future liability of an employee's pension. The projected benefit obligation assumes that the employee will continue to work and make contributions to the pension plan. It also assumes that contributions will increase as the employee's salary also increases. See also: Accumulated benefit obligation.

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References in periodicals archive

We conduct simulations on the value of the project to the claimants of the firm while varying the amount of financial leverage, the size of the projected benefit obligation, and the asset allocation of the pension fund.

Pension policy and the value of corporate-level investment

The Projected Benefit Obligation (PBO) is the actuarial present value of all pension benefits attributed to prior employee service calculated using the plan's benefit formula.

Pension Expense? What Pension Expense?

These represent changes in the value of either the projected benefit obligation or plan assets resulting from 1) differences between actuarial assumptions and actual experience, or 2) a change in actuarial assumptions (e.g., retirement age, mortality, employee turnover, discount rate).

A new reality ahead for pension accounting: the recession's aftermath and IAS 19R prompt changes in accounting practices

The accumulated benefit obligation differs from the projected benefit obligation in that it includes no assumption about future compensation levels.

Official releases: FASB No. 132 ... SOP 03-4 ... SOP 03-5

The amount by which the pension plan is underfunded (i.e., projected benefit obligation exceeding the market value of the plan assets) must be recognized in full on the balance sheet of the sponsoring firm.

Provocative pension accounting: standard setters worldwide should model changes in pension accounting on a novel new approach the U.K.'s accounting standards board has taken

Second, a reconciliation of the funded status of the plan (i.e., the difference between the projected benefit obligation and the fair value of the plan assets) with the prepaid asset or accrued liability reported in the balance sheet is no longer required.

Pension and other post-retirement benefits disclosures for closely-held companies under SFAS 132

Franciscan Alliance's defined benefit pension plan was 96% funded on an accumulated benefit obligation (ABO) basis and 89% funded on a projected benefit obligation (PBO) basis at Sept.

Fitch Rates Franciscan Alliance's (IN) Series 2017B/C Bonds 'AA'; Outlook Stable

Under current accounting in the United States for defined benefit plans (formerly SFAS 158, now Accounting Standard Codification [ASC] Topic 715, Compensation--Retirement Benefits), companies with defined benefit pension plans must recognize the difference between the plan's projected benefit obligation and its fair value of plan assets as either an asset or a liability.

How IFRS convergence will affect accounting for defined benefit plans

For our company above, here is how the FAS 88 impact might work: Before Settlement Impact of Settlement Projected Benefit Obligation $ (100,000,000) $ 40,000,000 Assets 120,000,000 (42,000,000) Funded Difference 20,000,000 (2,000,000) Transition Obligation 5,000,000 0 Prior Service Cost 0 0 Unrecognized Gain (35,000,000) 15,588,000 (Accrued)/ Prepaid Pension Expense $ (10,000,000) $13,588,000 After Settlement Projected Benefit Obligation $ (60,000,000) Assets 78,000,000 Funded Difference 18,000,000 Transition Obligation 5,000,000 Prior Service Cost 0 Unrecognized Gain (19,412,000) (Accrued)/ Prepaid Pension Expense $ 3,588,000

Look to Annuities to Salve Pension Fears