What is Other postretirement benefits?
In short
Other postretirement benefits are benefits other than pensions, mainly retiree health care, that employees earn during service. They are accounted for much like defined benefit pensions.
Key takeaways
- The obligation is attributed from the date of hire to the date the employee becomes fully eligible.
- The accumulated postretirement benefit obligation is the present value of benefits earned to date.
- Many plans are unfunded, so the balance sheet shows a liability for the full obligation.
Where it's tested
BAR: Employee Benefit Plan Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A defined benefit plan has plan assets with a fair value of $8,000,000 and a projected benefit obligation of $9,500,000. How is this reported on the balance sheet?