Module 9.2: Defined Benefit Plans—Balance Sheet Flashcards
projected benefit obligation (PBO)
is the actuarial present value (at an assumed discount rate) of all future pension benefits earned to date, based on expected future salary increases.
Annual Unit Credit (benefit)
= value at retirement ÷ number of years of service
Current service cost
present value of benefits earned by the employees during the current period
Interest Cost
increase in the obligation due to the passage of time
Past (prior) service costs
retroactive benefits awarded to employees when a plan is initiated or amended
Changes in actuarial assumptions
gains and losses that result from changes in variables such as mortality, employee turnover, retirement age, and the discount rate.
Benefits paid
reduce the PBO
Funded Status of a Pension Plan
asset ceiling
ceiling of present value of future economic benefits (such as future refunds or reduced contributions)
