Explore commonly used personal finance terms.
Allocated Benefit Obligation (ABO) is an actuarial measure of a pension plan’s liability based on employee service up to the calculation date. It considers factors like salary, years of service, and future benefits. ABO calculations help pension funds determine funding needs, manage pension obligations, and assess the financial health of defined-benefit plans. It is essential for regulatory compliance and financial reporting, helping organizations understand and plan for their long-term pension liabilities.
