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Journal entry — FASB continues redeliberating proposed changes to the disclosure requirements for defined benefit plans

Published on: Feb 22, 2018

At its meeting on February 14, 2018, the FASB discussed and made tentative decisions on its proposed Accounting Standards Update (ASU)1 that was issued in January 2016 as part of the disclosure framework project. Refer to the summary of tentative Board decisions for additional information.

Tentative Decisions Made

The Board reaffirmed amendments in its proposal that would remove the following disclosure requirements:

1.The amount and timing of plan assets expected to be returned to the employer
2.The disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law
3.The related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employers or related parties and the plan
4.The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year
5.For nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy.

The Board decided to add or revise the following proposed disclosure requirements:

  1. “Add a disclosure of the weighted-average interest crediting rate for cash balance plans and other plans with a promised interest crediting rate.”
  2. Revise the proposed disclosures to only require a “narrative description of the reasons for significant gains and losses affecting the benefit obligation.”

In addition, the Board reconsidered its proposed removal of the current disclosure requirements and decided to retain the following:

1.The amount of the accumulated benefit obligation (ABO) for pension plans.
2.The aggregate ABO and the aggregate fair value of plan assets with ABOs in excess of plan assets. The Board requested [the staff to undertake] further research on [alternative approaches to] aggregate information for underfunded (including unfunded) pension plans based on both the projected benefit obligation (PBO) and ABO benchmarks.
3.The organization of disclosures under the current guidance in Subtopic 715-20.[2]

Further, the Board decided not to add the following disclosure requirements, which are no longer part of its proposal:

  1. “[Q]uantitative and qualitative disclosures from [ASC] 820 on fair value measurement about [plan] assets measured at net asset value (NAV) using a practical expedient.”
  2. “A description of the nature of the benefits provided, the employee groups covered, and the type of benefit plan formula.”

The Board also decided not to require mandatory disaggregated disclosure of domestic and foreign pension and other postretirement benefit plans. The Board “decided to retain the current disclosure requirement in paragraphs 715-20-50-2 and 715-20-50-4. That guidance allows aggregated disclosure unless (1) disaggregating in groups provides useful information or (2) the benefit obligations of the plans outside the United States for a U.S reporting entity or of foreign plans for a foreign reporting entity are significant relative to the total benefit obligation and those plans use significantly different assumptions.”

Health Care Cost Trend Rate

The Board also decided “to remove the disclosure of the effect of a one-percentage-point increase and the effect of a one-percentage-point decrease in the assumed health care cost trend rate for public entities.”

The Board requested that the staff conduct further user outreach on the removal of that disclosure.

Other Disclosure Requirements

The Board also decided not to consider removing, adding, or amending other disclosure requirements.

Transition and Transition Disclosures

The Board affirmed the proposed transition guidance, which would require an entity to apply a retrospective transition method for these disclosure amendments.

Next Steps

The Board will complete redeliberations at a future meeting.


1 FASB Proposed Accounting Standards Update, Changes to the Disclosure Requirements for Defined Benefit Plans.

2 For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”

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