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Pension obligations
Defined-benefit pensions, the projected benefit obligation and funded status, with IBM, Pfizer and Coca-Cola.
The short answer
A defined-benefit pension promise is measured as a projected benefit obligation: the present value of benefits already earned, including assumed future pay increases for plans that use final pay in the formula. The plan's assets are reported at fair value. The difference is the funded status, which appears on the balance sheet as a net asset or a net liability. The 10-K pension note shows the obligation, the assets, the assumptions (discount rate and expected return among them) and the year's cost, which is not the same as the year's cash contribution.
The projected benefit obligation
Defined-benefit plans pay a formula benefit, often based on salary and years of service. Defined-contribution plans, such as a 401(k), credit a contribution to an employee's account and do not leave the company with a formula obligation of that kind. Pfizer's 2025 10-K notes that the majority of its employees worldwide are covered by defined benefit pension plans, defined contribution plans or both, and also describes other postretirement benefit plans consisting primarily of medical insurance for retirees and their eligible dependents.
IBM's 2025 10-K states that, for defined benefit pension plans, the benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. For nonpension postretirement plans, the comparable figure is the accumulated postretirement benefit obligation, which uses a similar present-value idea without the same future-pay assumption used in the PBO.
Source: Pfizer 10-K for fiscal 2025, filed Feb 26, 2026 · IBM 10-K for fiscal 2025, filed Feb 24, 2026
Funded status and the year's cost
The funded status is the fair value of plan assets minus the benefit obligation. If assets fall short, the shortfall is a liability. If assets exceed the obligation, a net asset is recorded, subject to limits. Coca-Cola's 2025 10-K reports that, as of December 31, 2025, the projected benefit obligation of the U.S. qualified pension plan was $3,907 million, and the fair value of the plan assets was $3,896 million: a plan very close to fully funded on that measure. The same note also shows other plans, often less well funded, so the U.S. qualified plan is not always the whole picture.
Source: Coca-Cola 10-K for fiscal 2025, filed Feb 20, 2026
The income-statement cost (service cost, interest cost, expected return on assets and amortizations of past gains and losses) is a different figure from the cash the company actually contributed to the plans during the year. Assumptions move both the obligation and the cost: a lower discount rate typically raises the PBO; the expected long-term return on assets affects the year's cost but not the obligation itself. Those assumptions, and a sensitivity table when one is provided, sit in the pension note. Changes in the funded status that do not go through earnings often go through other comprehensive income. The balance sheet is where the net asset or liability appears.
Common questions
What is a projected benefit obligation?
The actuarial present value of benefits earned to date, including assumed future compensation increases for plans that use pay in the formula. IBM's 10-K uses that definition and the abbreviation PBO.
What is funded status?
Plan assets at fair value minus the benefit obligation. A deficit is a net liability; a surplus is a net asset. Coca-Cola's 2025 10-K reports a U.S. qualified-plan PBO of $3,907 million and plan assets of $3,896 million.
Is pension expense the same as the cash contribution?
No. Expense is an accounting figure that includes service cost, interest cost, the expected return on assets and various amortizations. The cash contribution is the amount actually paid into the plan during the year. Both appear in the pension note.
What is the difference between a defined-benefit and a defined-contribution plan?
A defined-benefit plan promises a formula benefit and leaves the company with an obligation to fund it. A defined-contribution plan, such as a 401(k), specifies the contribution. Pfizer notes that most of its employees are covered by one, the other, or both.
Where do I find this in the 10-K?
In the pension and other postretirement benefits note, and as a net asset or liability on the balance sheet. The MD&A may also discuss contributions, funded status and the effect of assumptions when the amounts are material.
Disclosures
- Editor holdings
- The editor holds no position in any company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 10, 2026
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