Different values are placed on the liabilities of defined benefit pension plans in different contexts. How do these values relate to one another?

This Russell Investments Practice Note addresses how the measures of pension liabilities relate to one another by comparing the following:

  • Economic value (EV)
  • Projected benefit obligation (PBO)
  • Accrued benefit obligation (ABO)
  • Funding target liability (FTL)
  • Annuity buyout or “pension risk transfer” cost (PRT)
  • Total economic cost (T)
  • Hibernation cost (H)
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