Pension Plan Funding Requirements under

bchadwick

Accrued benefits for retirees and active participants have to be covered. This forms the Accumulated Benefit Obligation (ABO).

Future benefits include:
(i) Future wages for active employees
(ii) Inflation growth for past and future wages
(ii) Real growth for past and future wages

The above in addition to deferred employee benefits and ABO sum up to the total Projected Benefit Obligation - this PBO is used in calculating the surplus or shortfall.

What is Future Services Rendered? I understand that this is not covered.

Also, what is the discount rate typically used to compute the liabilities?

bpdulog

DR should be rate of long term bond

pennyless

Long term high quality (govt) bond, that is

Valores

I understand that to compute PV of Liabilities, you use the same IRR as that of the asset portfolio used to fund the liabilities.

liangfeng

Future services rendered is the amount you have to allocate for an employee assuming they don't get fired or leave.

NO EXCUSES