What is accumulated benefit obligation in accounting?

[DanieleBun]

I’m studying pension accounting and came across accumulated benefit obligation (ABO). How is it calculated, and how does it differ from PBO?

 

[Rick_Grimes]

Accumulated Benefit Obligation (ABO) refers to the value today of the pension benefits that employees have become entitled to up until now, calculated by their current salary and years of service, with no consideration of future salary increments. The primary purpose of ABO is to ascertain the extent of a company's pension liability at a given time.

 

[Oscar]

he accumulated benefit obligation (ABO) is the present value of pension benefits earned to date by employees, based on current salary levels and years of service.

 

[alexmetro]

ABO is basically the present value of pension benefits employees have earned so far, calculated using current salaries; I remember thinking of it as the “earned to date” amount. PBO is a bit higher because it also factors in expected future salary increases.