Which of the following is a key characteristic of a defined benefit obligation?

A defined benefit obligation (DBO) is fundamentally linked to the retirement benefits that an employee is entitled to earn based on their service with the employer. One of the key characteristics of a DBO is that it encompasses future payments that arise from the service of both current and past employees. This means that the total obligation accounts for all expected future payments related to benefits that have been earned, regardless of whether the employees are still working for the company at the time the obligation is assessed.

This characteristic of including future payments from current and past employee service highlights the essence of a defined benefit plan, where the employer bears the risk of providing a specified benefit at retirement, essentially creating a commitment that extends beyond just the contributions made during an employee's active years.

In contrast, the other options would mischaracterize the nature of a defined benefit obligation, as they suggest limitations regarding which employees it covers or how it relates to service. Options that indicate a restriction purely to current employees or to only vested benefits would not properly capture the concept of a defined benefit obligation, which is broader in scope and duration.