NEWS RELEASE 07/27/11
FASB Improves Employer Disclosures for Multiemployer Pension
PlansNorwalk, CT, July 27, 2011—The Financial Accounting
Standards Board (FASB) today approved a revised accounting standard intended to
provide more information about an employer´s financial obligations to
multiemployer pension plans.
Multiemployer pension plans commonly are
used by an employer to provide benefits to union employees who may work for many
employers during their working life, thereby enabling them to accrue benefits in
a single pension plan for their retirement.
"Historically, very limited
information about these plans has been disclosed, even though they may represent
significant potential obligations for many large, unionized industries such as
trucking, supermarket chains, and construction firms," said FASB Chairman Leslie
"The enhanced disclosures will ensure that shareholders in
companies that participate in these plans, workers who depend on them for their
retirement benefits, as well as lenders and others, will have more information
regarding the employers´ pension commitments and the financial health of the
Prior to today´s action by the FASB, employers were required to
disclose only their total contributions to all multiemployer plans in which they
Today´s decisions conclude comprehensive deliberations
about the disclosures an employer should provide. The FASB issued initial
proposals for revising disclosures for public comment in September 2010.
As part of its redeliberations, the FASB decided to delete a proposal to
require employers to disclose their withdrawal liability to all plans in which
they participate, or provide a "point-in-time" estimate of its obligations with
respect to the underfunded status of individual plans.
Many of those who
commented on the FASB´s proposal on multiemployer plans told the Board that the
withdrawal liability would not be an appropriate proxy for an employer´s
proportional share of the underfunded status of the plan. They suggested that
the employer´s share of the underfunded status of the plan can only be
determined through the collective bargaining process and they urged the FASB not
to require a "point-in-time" estimate of an employer´s obligations with respect
Pursuant to the FASB´s decisions, the new disclosures
The FASB expects that the revisions approved today will be finalized
in September 2011. 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
- 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
five percent of total contributions to the plan.
- An indication of which plans, if any, are subject to a funding improvement
- The expiration date(s) of collective bargaining agreement(s) 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 plan 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.
About the Financial Accounting Standards
Since 1973, the Financial Accounting Standards Board has
been the designated organization in the private sector for establishing
standards of financial accounting and reporting. Those standards govern the
preparation of financial reports and are officially recognized as authoritative
by the Securities and Exchange Commission and the American Institute of
Certified Public Accountants. Such standards are essential to the efficient
functioning of the economy because investors, creditors, auditors, and others
rely on credible, transparent, and comparable financial information. For more
information about the FASB, visit our website at www.fasb.org.