Accumulated Benefit Obligation
Definition of 'Accumulated Benefit Obligation'An approximate measure of a company's pension plan liability. The accumulated benefit obligation (ABO) is estimated based on the assumption that the pension plan is to be terminated immediately; it does not consider any future salary increases. This differs from the projected benefit obligation, which assumes that the pension plan is ongoing, and thus accounts for future salary increases. |
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Investopedia explains 'Accumulated Benefit Obligation'Looking over a company's pension accounting can be an important piece of analysis for investors. Pension accounting is an area in which a company can be aggressive in many ways, such as the discount rate used for future pension obligations. |
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