The Financial Accounting Standards Board has released a new Accounting Standards Update aimed at improving employer disclosures for multiple-employer pension plans.
Accounting Standards Update No. 2011-09, “Compensation— Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan,” is intended to encourage employers to supply additional information about their financial obligations to multiemployer pension plans. Those plans typically are used to provide benefits to union employees, who may work for many employers during their working life, allowing them to accrue benefits in a single pension plan for their retirement. Up to now, employers have been required to disclose only their total contributions to all of the multiemployer plans in which they participated.
The new disclosures, as proposed in July, go much further (see FASB Requires More Pension Plan Disclosures). They include the amount of employer contributions made to each significant plan and to all plans in total; an indication of whether the employer’s contributions represent over 5 percent of the total contributions to the plan; an indication of which plans, if any, are subject to a funding improvement plan; and the expiration dates of any collective bargaining agreements and any minimum funding arrangements.
Another change involves the most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” a requirement of 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 percent funded, between 65 percent and 80 percent funded, or at least 80 percent funded.
The update, which was released Wednesday, also requires a description of the nature and effect of any changes that affect the comparability for each period in which a statement of income is presented.
The September 2011 edition of FASB in Focus provides an overview of the main provisions in the update. For public entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2011. For nonpublic entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2012. Early application will be permitted.
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