What is the pension plan liability named under IFRS?

The pension plan liability under IFRS is referred to as the Defined Benefit Obligation (DBO). This term captures the present value of the expected future payments to employees for their pension benefits based on their service to date and expected future salary increases. It encompasses all benefits earned for service already rendered, taking into account actuarial assumptions such as mortality rates, employee turnover, and future salary growth.

This classification under IFRS highlights the obligation of the employer to pay retirement benefits, which contrasts with defined contribution plans where the employer's obligation is limited to the contributions made. Recognizing the DBO on the balance sheet provides a clear picture of the company's long-term liabilities related to employee pensions, reflecting the promises made to employees for their future service.