FASB statement on penisons and other retirement plans
30 Sep 2006
The US Financial Accounting Standards Board has issued FASB Statement No.
158 Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. FASB is conducting its retirement benefits project in phases. The goal of phase 1 is to make balance sheets more complete, transparent, and understandable. FAS 158 is intended to do that. Phase 2 is comprehensive reconsideration of accounting for pensions and other retirement plans. For an entity whose securities are traded in a public market, the recognition provisions of FAS 158 (see below) are effective for fiscal years ending after 15 December 2006. For non-public entities, the effective date is fiscal years ending after 15 June 2007. FAS 158 also requires that employers measure plan assets and benefit obligations as of the balance sheet date; this requrement takes effect for all entities for years ending after December 15, 2008. In July 2006, the IASB added to its agenda a two-phase Project on Post-Retirement Benefits including Pensions. The IASB plans to complete phase 1 in 2010 with an interim standard that would address presentation and disclosure, definition of defined benefit and defined contribution arrangements, accounting for cash balance plans (possibly), smoothing and deferral mechanisms, and treatment of settlements and curtailments. Click for (PDF 56k). FAS 158 is available on FASB's Website without charge.
For many entities with defined benefit plans, FAS 158 could result in increased liabilities, with corresponding reductions in equity.
Under FAS 158, an employer that is a business entity is required to:
|