What does the Accumulated Benefit Obligation (ABO) reflect for Jack In The Box employees?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
Additional year-end pension plan information — The PBO represents the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation ("ABO") also reflects the actuarial present value of benefits attributable to employee service rendered to date but does not include the effects of estimated future pay increases. Therefore, the ABO as compared to plan assets is an indication of the assets currently available to fund vested and nonvested benefits accrued through the end of the fiscal year. The funded status is measured as the difference between the fair value of a plan's assets and its PBO. Since the Qualified Plan is frozen and the SERP has no active participants, the PBO and ABO are equal.
As of September 29, 2024 and October 1, 2023, respectively, the Qualified Plan's ABO was less than the fair value of its plan assets. The SERP is an unfunded plan and, as such, had no plan assets as of September 29, 2024 and October 1, 2023.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 93–94)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, the Accumulated Benefit Obligation (ABO) reflects the actuarial present value of retirement benefits attributed to employee service rendered up to a specific date. Unlike the Projected Benefit Obligation (PBO), the ABO does not account for estimated future pay increases. This means the ABO provides a snapshot of the benefits earned based on current salaries and service duration. For Jack In The Box employees, the ABO offers insight into the present value of benefits they've accrued, without projecting future salary growth.
The ABO, when compared to the plan assets, indicates the assets currently available to fund both vested and nonvested benefits accrued up to the end of the fiscal year. In the case of Jack In The Box's Qualified Plan, as of September 29, 2024, and October 1, 2023, the ABO was less than the fair value of its plan assets. This suggests that the plan was in a relatively healthy position to cover its obligations. However, the Supplemental Executive Retirement Plan (SERP) is unfunded and, therefore, had no plan assets as of those dates.
For a prospective Jack In The Box franchisee, understanding these details about employee retirement plans is crucial. While franchisees are not directly responsible for the corporate-level retirement plans, these obligations can impact the overall financial health of Jack In The Box, which in turn could affect the stability and support provided to franchisees. Additionally, franchisees who employ their own staff may want to consider how their own employee benefits packages compare to those offered by the parent company, as this can influence employee satisfaction and retention.