What is the difference between a soft freeze and hard freeze pension curtailment?

Soft freeze: stops new participants from joining but existing participants continue to accrue benefits. Hard freeze: stops all future benefit accrual for all participants. Both trigger curtailment accounting, but hard freeze creates larger immediate recognition of prior service cost.

How is the curtailment gain or loss measured?

Curtailment gain/loss = reduction in PBO (from eliminated future benefit accruals) minus unrecognized prior service cost associated with eliminated service. Net positive result is a curtailment gain; net negative is a loss. Both are recognized in income in the period the curtailment occurs.

Pension Curtailment Gain Calculation

Calculate pension curtailment gain when a defined benefit plan is frozen or participant count reduces significantly, triggering recognition of unrecognized prior service cost as an immediate gain or loss.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate pension curtailment gain when a defined benefit plan is frozen or participant count reduces significantly, triggering recognition of unrecognized prior service cost as an immediate gain or loss. Use the pension curtailment result to inform your calculation.

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