The first is the accumulated benefit obligation
, which is the present value of pension benefits owed to the plan participants based on current salary and service levels.
Certain terms used in this Statement, such as projected benefit obligation, (3) accumulated benefit obligation
, accumulated postretirement benefit obligation, and net pension cost, are defined in Statements 87 and 106.
In addition, the accumulated benefit obligation
exceeded the accrued pension liability in the second year shown for the employer's nonqualified pension plan.
Pension Benefits 2005 2004 2003 (Millions of dollars) Change in benefit obligation: Benefit obligation, beginning of year $9,593 $8,993 $7,844 Service cost 150 143 122 Interest cost 555 548 554 Plan amendments 204 __ (27) Actuarial losses (gains) 863 584 1,148 Foreign currency exchange rates __ __ __ Participant contributions __ __ __ Benefits paid (686) (675) (648) Benefit obligation, end of year $10,679 $9,593 $8,993 Accumulated benefit obligation
, $10,213 $9,040 $8,379 end of year Non-U.
The recording, on a plan-by-plan basis, of a minimum liability if the benefit obligation (computed without the future compensation component) exceeds plan assets [Generally, a company must recognize a minimum liability to the extent that any individual plan has an accumulated benefit obligation
(ABO) in excess of the fair market value of its assets.
For example, assume that the fair value of the assets of a defined benefit plan totaled $4 million and the accumulated benefit obligation
As a result, SFAS 132 no longer required the disclosure of the accumulated benefit obligation
(a measure of pension liability that ignores future salary increases).
The amount of the accumulated benefit obligation
for all defined benefit pension plans.
SFAS 132R requires that the accumulated benefit obligation
(ABO) always be disclosed.
The accumulated benefit obligation
(ABO) for pensions is the actuarial present value, using current salary levels, of the benefits earned to date.