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Required information The pension expense is a composite of periodic changes in both the projected benefit obligation and the plan assets.

Required information

The pension expense is a composite of periodic changes in both the projected benefit obligation and the plan assets. Service cost is the increase in the PBO attributable to employee service and is the primary component of pension expense. The interest and return-on-assets components are financial items created only because the pension payment is delayed and the obligation is funded currently. Prior service cost is recognized over employees' future service period. Also, neither a loss (gain) on the PBO nor a loss (gain) on plan assets is immediately recognized in pension expense; they are recognized on a delayed basis to achieve income smoothing.



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