FASB Adds Project on Measurement of “Cash-Balance” Defined Pension Plan Obligations

At its Board meeting on September 24, the Financial Accounting Standards Board added a limited scope project to its agenda that would lead to an Interpretation of FASB Statement No. 87, Employers’ Accounting for Pensions. The project will address the measurement of obligations under so-called “cash balance” pension plans. Current accounting guidance does not specifically address the types of benefit arrangements that exist in many cash balance pension plans.


Key objectives of the project will be to define the characteristics of the plans that the proposed guidance would apply to—that is, what a “cash balance” plan is for purposes of the proposed Interpretation—and to provide an accounting method that can be used consistently by companies to measure their pension obligations to employees.


The Board directed the FASB staff to prepare a proposal of the project’s scope and to prepare a timetable for the project.