Vested Benefit Obligation - VBO


DEFINITION of 'Vested Benefit Obligation - VBO'

The actuarial present value of pension plan benefits belonging to employees of an organization. The vested benefit obligation (VBO) is one measure of a pension fund's liability. The VBO only considers benefits that have vested in an employee, as opposed to the accumulated benefit obligation (ABO), which represents the present value of any benefits, whether vested or not.

BREAKING DOWN 'Vested Benefit Obligation - VBO'

Since minimum vesting requirements are generally five years, the values of the vested benefit obligation and accumulated benefit obligation are very close in most pension plans. While the ABO and VBO values are required to be disclosed at fiscal year-end, in cases where the values are almost similar, companies' financial statements show the ABO value and state that the VBO and ABO values are not materially different.

  1. Vesting

    The process by which employees accrue non-forfeitable rights ...
  2. Fully Vested

    A person's right to the full amount of some type of benefit, ...
  3. Graduated Vesting

    The accelerated benefits employees receive as they increase the ...
  4. Accumulated Benefit Obligation

    An approximate measure of a company's pension plan liability. ...
  5. Pension Benefit Obligation - PBO

    An accounting term used to describe the amount of money a company ...
  6. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
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