Attribution period definition
/What is the Attribution Period?
The attribution period is the time period over which the accrual is calculated for a post retirement benefit obligation. This period normally begins on an employee’s hire date and ends on the employee’s full eligibility date.
Example of an Attribution Period
A company offers a postretirement health benefit plan to its employees. According to the plan, employees become fully eligible for these benefits after completing 30 years of service. A breakdown of a sample attribution period is as follows:
Employee Hire Date: January 1, 1995
Full Eligibility Date (After 30 Years): January 1, 2025
Attribution Period: January 1, 1995 – January 1, 2025 (30 years)
During this 30-year attribution period, the company accrues the cost of the postretirement benefits for this employee. The company gradually recognizes the expense each year, rather than recording it as a lump sum upon retirement. If the employee leaves before reaching the eligibility date, they may not qualify for full benefits, and the accrued obligation could be adjusted accordingly.