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FASB Approves Final Changes to Proposed Disclosure Requirements for Multiemployer Pension Plans

Published on: 29 Jul 2011

Earlier this week, the Board approved the FASB staff’s final revisions to the proposed disclosure requirements for multiemployer pension plans. Under the existing guidance in ASC 715, employers are only required to disclose their total contributions made to all multiemployer plans in which they participate. The revised standard would require employers to provide financial statement users with more information about their pension obligations and the financial health of the multiemployer plans.

These final decisions are the end result of several rounds of deliberations in response to feedback received from stakeholders on the initial proposals in the Board’s fall 2010 exposure draft. On account of the strong negative feedback, the FASB removed the requirement for employers to disclose their withdrawal liability to all plans in which they participate as a proxy for their share of the unfunded pension obligation.

The FASB’s July 28, 2011, FASB in Focus article on this topic states that the new disclosure requirements for individually material plans include the following:

  1. Plan legal name and Employer Identification Number
  2. Most recent certified funded status, expressed as a “zone status,” as required by the Pension Protection
    Act of 2006. If zone status is not available, an employer should disclose whether the plan was:
    1. Less than 65 percent funded
    2. Between 65 percent and 80 percent funded
    3. Greater than 80 percent funded.
  3. Expiration date(s) of collective bargaining agreement(s) and any minimum funding arrangements
  4. Indication of whether the employer’s contributions represent more than 5 percent of total contributions to the plan
  5. Indication of what plans, if any, are subject to a funding improvement plan

Entities will also need to disclose (1) “contributions made to each individually material plan and the total contributions made to all other plans in the aggregate” and (2) a “description of the nature and effect of any changes affecting comparability . . . for each period in which a statement of income is presented.”

The FASB expects to issue an ASU on this topic in September 2011. For public entities, the ASU would be effective for fiscal years ending after December 15, 2011. For nonpublic entities, the ASU would be effective for fiscal years ending after December 15, 2012.

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