Question

___________Companies compute the vested benefit obligation using only vested benefits, at current salary levels.

Answer 1

Companies compute the vested benefit obligation using only vested benefits, at current salary levels.

Step-by-step explanation:

The subject of this question is Business.

Companies compute the vested benefit obligation using only vested benefits, at current salary levels. This means that when calculating the amount of money a company needs to set aside for pension benefits, they only include the benefits that have already vested, which are the benefits that employees are entitled to receive due to their years of service. They do not consider benefits that have not yet vested, meaning those that employees have not earned yet.

For example, if an employee has worked for a company for 10 years and is eligible for a pension benefit that vests after 5 years of service, only the benefits earned in the first 5 years would be included in the computation of the vested benefit obligation.