Economic Pension Expense

Till now our discussion regarding defined benefit pension reporting has focused on the accounting rules and techniques that company management can apply to pension plan assumptions to window dress financial statements.

When evaluating a company, the financial analyst seeks to determine the true economic positions of the company.  For companies with defined benefit pension plans, the analyst will need to calculate the economic pension expense.

Economic Pension Expense = the sum of changes to the DBO netted against the actual return on plan assets


Economic Pension Expense = Δ Funded Status – Company Contributions


R Programming Bundle: 25% OFF

Get our R Programming - Data Science for Finance Bundle for just $29 $39.
Get it now for just $29