With respect to pension liabilities, which of the following statements is true?

I. The projected benefit obligation (PBO) is always greater than or equal to the accumulated benefit obligation (ABO).
II. The vested benefit obligation (VBO) is always as least as or as big as the accumulated benefit obligation (ABO).
III. If the PBO is greater than the plan assets, the plan is said to be overfunded.
IV. If the weighted-average assumed discount rate is increased, the PBO will decrease.

A)I, III, and IV
B)I and III
C)II and IV
D)I and IV

Question

With respect to pension liabilities, which of the following statements is true?

I. The projected benefit obligation (PBO) is always greater than or equal to the accumulated benefit obligation (ABO).
II. The vested benefit obligation (VBO) is always as least as or as big as the accumulated benefit obligation (ABO).
III. If the PBO is greater than the plan assets, the plan is said to be overfunded.
IV. If the weighted-average assumed discount rate is increased, the PBO will decrease.

A)I, III, and IV
B)I and III
C)II and IV
D)I and IV

Quizplus · Accepted Answer

I. The Projected Benefit Obligation (PBO) includes assumptions about future compensation levels, making it generally greater than the Accumulated Benefit Obligation (ABO), which does not account for future salary increases.II. This statement is incorrect because the Vested Benefit Obligation (VBO) only includes benefits for which employees are already vested, which can be less than the ABO.III. This statement is incorrect; if the PBO is greater than the plan assets, the plan is underfunded, not overfunded.IV. Increasing the assumed discount rate decreases the present value of future pension obligations, thus reducing the PBO.

With Respect to Pension Liabilities, Which of the Following Statements