Explore commonly used personal finance terms.
ABO is the actuarial valuation of a pension plan’s liability based on employee services to date, calculated using current salary levels. It represents the present value of future pension payments owed, assuming no future salary increases. The ABO metric helps pension administrators and actuaries assess the current funding level required to meet obligations, providing a measure of financial preparedness. It is essential in defined-benefit plans to ensure they can meet future payments to retirees.
