Am I correct to assume that a VBO includes only people that are fully vested? So if the vesting schedule is 5 years, the ABO takes into account the person who earns 20% of the pension benefits, 40% of the benefits, etc. plus the people who are fully vested. The VBO will only include the people who have been at the firm for 5+ years and are fully vested. Yes?
correct from what i know. Doesn’t seem to be a very popular test question though but they could throw that in there
I believe VBO includes all levels of vesting. If I recall, VBO is the sum of each individual’s ABO multiplied by the person’s vested percentage. Only fully vested seems to strike a “doesn’t make sense” notion in my mind. Usually the only people who are not vested are young workers with a couple years of service. since ABO doesn’t consider future pay increases, ABO and VBO tend to be very close together.