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Accumulated Benefit Obligation
Definition
The present value of defined benefit pension benefits that are payable to all current vested participants, assuming the pension plan is immediately terminating. This term is sometimes abbreviated as ABO.
Using the term Accumulated Benefit Obligation :
At any point in time that a defined benefit pension plan needs to determine is full liabilities, it should calculate its accumulated benefit obligation.
Pay Special Attention To :
A big risk for defined benefit pensions is underfunding. By calculating the ABO, the trustees of a pension plan can monitor their funding levels.
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Related terms
Pension Plan , Defined Benefit Pension
