Defined Benefit Obligation

Defined Benefit Obligation or Liability (or DBO) is the discounted present value of all expected future obligations resulting from service rendered by the employee, up to and as at the valuation date.

This requires use of actuarial valuation method such as attributing benefits to expected period of service and using the various assumptions used to measure the defined benefit obligation including Demographic (mortality rate, attrition rate) and Financial (discount rate, salary escalation rate, expected rate of return on plan assets) assumptions.

To determine the DBO, the Projected Unit Credit actuarial method (or PUC) is required by IAS 19.

If there is any corresponding plan or scheme assets, we take them into consideration by deducting the fair value of those plan assets from the present value of the DBO.