Accounting for Other Post-retirement Benefits. Essay

Accounting For Other Post-Retirement BenefitsNameInstitution Affiliation
 Accounting For Other Post-Retirement BenefitsDiscuss the characteristics of OPRBs that make them different from defined benefit pension plans. Generally, all organizations use a formula to calculate defined benefit payments for retired employees. The benefit payment is calculated using factors such as age, earnings and the years of service. During the employee’s working days, the organization opens an account in which they deposit money that an employee will receive after retirement (Poterba et al., 2007). In this case, the employee must show up for work and fulfill some basic eligibility requirements so that they can be enrolled in the defined benefit plan. Contrarily, the OPRBs do not involve depositing money into an account, but employee’s future benefits include compensation for total costs incurred by an employee as a result of services such as healthcare services. Another difference between these two plans is that for defined payment, workers accumulate pension benefits over the years they stay in the company. On the other hand, OPRBs do accumulate with the years of service (Wahlen et al., 2012). Discuss how the accounting for OPRBs differs from the accounting for defined benefit pension plans.Accounting for OPRBs differs from that of defined benefit plans in several ways.• For OPRB, the prior service is compensable for the entire life of an employee as long as most workers are fully qualified to receive pensions. Otherwise, they will receive payment up to the date indicated in eligibility requirements (Wahlen et al., 2012). On the contrary, the prior service cost of a defined benefit plan is compensable as long as the employee is offering services to the organization (Poterba et al., 2007). • In OPRB, using different rating systems, the service cost benefit is paid to employees as long as they work in a particular organization. On the other hand, service cost of defined benefit plan, which is a component of pension benefit obligation is attributable to worker’s service in the current financial year (Poterba et al., 2007; Wahlen et al., 2012). •