Vested benefit obligation belongs in a plan-specific employer file. VBO measures actuarial present value only for benefits no longer contingent on future service. It uses the plan terms, participant data, and compensation embedded in the supported vested-benefit measure.
Apply it
A signed report may show VBO of $8.6 million, ABO of $9.4 million, and PBO of $11.2 million. The smallest amount is not incomplete; it answers the narrower vesting question.
Common mistake
Do not assume that vBO is the obligation used to measure pension funded status. VBO includes only vested benefits; pension funded status uses PBO and plan assets. That error would substitute a narrower analytical measure for the PBO used in pension funded status.
Keep the boundary clear
VBO does not use projected salary merely because PBO does. It supports vesting analysis and disclosure but does not replace PBO in pension funded status.
Authority
Read ASC 715-30-35-41 for measurement of vested benefits.
Put the concept to work
Apply this concept
- Explain and apply vested benefit obligation within a reconciled employer benefit-plan workpaper using supplied authoritative and actuarial facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Defined benefit pension plan — Apply
To apply this concept: Required. This prior concept supplies the plan route or reconciled input required here.