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.
Disclosures about pension plans with assets in excess of the accumulated benefit obligation
generally may be aggregated with disclosures about pension plans with accumulated benefit obligations
in excess of assets.
However, since nonqualified plans generally do not have plan assets, the accumulated benefit obligation
and fair value of assets may need to be shown separately (see "Employers With Two or More Plans").
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.S.
Beginning in 1989, Statement 87 is requiring companies with plans in which the accumulated benefit obligation
(ABO) exceeds the sum of pension assets and unfunded accrued pension cost to show additional balance sheet liabilities to account for the deficit.
In 2003, companies were again required to disclose the aggregate accumulated benefit obligation
, but not to separately state the vested and nonvested benefits.
If a plan has an unfunded accumulated benefit obligation
as of the most recent measurement date, say December 31, 1988, calculating that amount is the first step in computing the pension liability that must be recognized on the employer's balance sheet at March 31, 1989.
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.