Gains and losses include changes in the value of plan assets and in the amount of projected benefit obligations (PBO).
As a minimum, amortization of a net gain or loss included in AOCI (excluding asset gains and losses not yet reflected in market-related value) shall be included as a component of net pension cost for a year if, as of the beginning of the year, that net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets.
First, the projected benefit obligations among the public firms are relatively large.
The same effect occurs when, holding the debt level of the plan sponsor constant, the projected benefit obligation is larger.
Increasing the discount rate assumption decreases both the accumulated and the projected benefit obligations. If a pension or other postretirement benefit plan (e.g., a retiree health care plan) is underfunded, increasing the discount rate decreases the accrual needed for the underfunded portion, or may even eliminate the need for an accrual.
Consistent with SFAS 158, a pension plan is deemed to be underfunded if the fair value of the pension plan assets is less than the projected benefit obligation (PBO).
DB plan, the funding ratio on accumulated benefit obligations increased from 95 percent at the start of 2004 to 99 percent at the beginning of 2005, while funding of projected benefit obligations
rose from 88 percent to 91 percent.
Calculate the interest costs on past service liabilities, technically known as projected benefit obligations. Past service liabilities are the present value of retirement benefits earned in all earlier years, discounted at the same high-grade bond yield used in Step One.
Notice that the discounting rate to determine the present value of projected benefit obligations is the same as the rate by which they are multiplied to calculate this year's cost.
87, the Board recognized the logic of reflecting plan assets and projected benefit obligations on the balance sheet.
If pension plan assets and the projected benefit obligations of General Motors were included in its balance sheet at 12/31/91 on a net basis, shareholders' equity would decrease by $1.8 billion.