The Accumulated Benefit Obligation (ABO) is a company's pension obligation that accounts for the current value of benefits earned by participants up to a given date, calculated using current salaries and service years, without considering future salary increases. This financial metric is critical in assessing the financial health and obligations of a company's defined benefit pension plan.
A condition that is recognized when the accumulated benefit obligation (ABO) is greater than the fair value of plan assets. When this occurs, an additional liability must be recorded if an accrued pension liability is already present.
