Employer Disclosures for Multi-employer Pension Plans Approved by FASB
The Financial Accounting Standards Board (FASB) recently approved a revised accounting standard intended to provide more information about an employer’s financial obligations to multiemployer pension plans. The revised standard, which the FASB expects to finalize in September 2011, will require enhanced disclosures by employers participating in multiemployer pension plans.
As a result of comments received on the initial proposal issued in September 2010, the FASB deleted the requirement for employers to disclose their withdrawal liability to all plans in which they participate, or provide a “point-in-time” estimate of their obligations with respect to the underfunded status of individual plans. Prior to the current action by the FASB, employers were required to disclose only their total contributions to all multiemployer plans in which they participate.
The new disclosures will include the following:
- 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 5 percent of total contributions to the plan.
- An indication of which plans, if any, are subject to a funding improvement plan.
- The expiration dates of collective bargaining agreements 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 plans is:
- Less than 65 percent funded
- Between 65 percent and 80 percent funded
- Greater than 80 percent funded
A description of the nature and effect of any changes affecting comparability for each period in which a statement of income is presented.
Additional narrative disclosures will be required, as well as certain disclosures for employers with individually material plans that do not have plan level information that is publicly available.
For public entities, the enhanced disclosures will be required in fiscal years ending after December 15, 2011. For nonpublic entities, the enhanced disclosures will be required in fiscal years ending after December 15, 2012.