prior service cost

prior service cost definition - business

prior service cost

The expense to an employee to purchase service credits used in determining the employee's retirement benefits. For example, a teacher pays $10,000 to purchase three years of service performed in a different state. Purchase of the credits will result in an increase in the teacher's annual retirement income.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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