FASB: Improvement of employer disclosures for multi-employer pension plans
27 July 2011
The FASB approved a revised accounting standard intended to provide more information about an employer's financial obligations to multi-employer pension plans.
Multiemployer pension plans commonly are used by an employer to provide benefits to union employees who may work for many employers during their working life, thereby enabling them to accrue benefits in a single pension plan for their retirement.
Prior to this action by the FASB, employers were required to disclose only their total contributions to all multiemployer plans in which they participate.
Last decisions conclude comprehensive deliberations about the disclosures an employer should provide. The FASB issued initial proposals for revising disclosures for public comment in September 2010.
As part of its redeliberations, the FASB decided to delete a proposal to require employers to disclose their withdrawal liability to all plans in which they participate, or provide a “point-in-time” estimate of its obligations with respect to the underfunded status of individual plans.
Pursuant to the FASB’s decisions, the new disclosures will include:
- The amount of employer contributions made to each significant plan and to all plans in the aggregate.
- An indication of whether the employer’s contributions represent more than five percent of total contributions to the plan.
- An indication of which plans, if any, are subject to a funding improvement plan.
- The expiration date(s) of collective bargaining agreement(s) and any minimum funding arrangements.
- The most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” which is required by the Pension Protection Act of 2006. If the “zone status” is not available, an employer will be required to disclose whether the plan is:
- Less than 65 per cent funded
- Between 65 per cent and 80 percent funded
- Greater than 80 per cent funded.
- A description of the nature and effect of any changes affecting comparability for each period in which a statement of income is presented.
© FASB
