Project Pages

Accounting and Financial Reporting for Pensions Provided through Certain Multiple-Employer Pension Plans

Project Description: The objective of this project is to address issues related to the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions, for pensions provided to the employees of state and local governmental employers through certain multiple-employer defined benefit pension plans.

Status:
Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, was approved in December 2015.

Accounting and Financial Reporting for Pensions Provided through Certain Multiple-Employer Pension Plans—PROJECT PLAN

Background: Statement 68 was approved in June 2012 and became effective for fiscal years beginning after June 15, 2014. Formal requests have been received from stakeholders to reconsider the scope and applicability of Statement 68 in circumstances in which employers have employees who are provided with pensions through certain multiple-employer defined benefit pension plans (for example, certain private-sector pension plans, such as Taft-Hartley plans, and plans that have similar characteristics).

At the July 2015 meeting, the Board decided to add a project (Pension Benefit Issues) to the current technical agenda to address this issue, as well as certain other issues that have been raised during the implementation of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68. However, as a result of additional stakeholder feedback, the Board agreed to address the issue related to pensions provided through certain multiple-employer defined benefit pension plans in a separate project.

Project History:

Added to current technical agenda: September 2015
Deliberations began: September 2015
Exposure Draft approved: October 2015
Comment period: October 2015–November 2015
Redeliberations began: December 2015
Final Statement issued: December 2015

ACCOUNTING AND FINANCIAL REPORTING FOR PENSIONS PROVIDED THROUGH CERTAIN MULTIPLE-EMPLOYER PENSION PLANS—RECENT MINUTES


Minutes of Teleconference, December 8, 2015

The Board reviewed a ballot draft of Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, and provided clarifying edits. The Board then voted unanimously to approve the issuance of the final Statement.

Minutes of Teleconference, December 7, 2015

The Board considered feedback from stakeholders about the Exposure Draft, Accounting and Financial Reporting for Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans.

The discussion began with an overview of comments indicating general agreement with the proposals in the Exposure Draft, followed by issues raised regarding the scope and applicability of the proposed Statement. With respect to the characteristic described in (b) of paragraph 2 of the Exposure Draft, the Board tentatively agreed to provide clarification by explicitly stating that the pension plan is used to provide defined benefit pensions both to employees of state and local governmental employers and to employees of employers that are not state or local governmental employers. With respect to the characteristic described in (c) of paragraph 2, the Board considered respondent requests for additional guidance as to how to determine whether there is a predominant governmental employer that provides pensions through the pension plan. The Board tentatively agreed that, because the determination of predominance is necessarily subjective and based on the facts and circumstances of the arrangement, no additional guidance should be provided.

The Board then discussed issues raised regarding the proposed recognition and measurement requirements. The Board tentatively agreed that the final Statement should include recognition and measurement provisions related to payables for separate liabilities to the pension plan, for example, for amounts that are assessed to an employer upon joining a pension plan. In addition, the Board tentatively decided to carry forward to the final Statement all other requirements for recognition and measurement as proposed in the Exposure Draft.

Next, the Board discussed respondent comments regarding the provisions for notes to financial statements. The Board considered several modifications to the requirements for notes to financial statements that were proposed by respondents to the Exposure Draft.

After considering the suggested changes, the Board tentatively agreed that the final Statement should include the addition of a requirement to disclose descriptive information about payables, including significant terms related to the payables and what gave rise to the payables.

The Board then discussed due process comments regarding required supplementary information (RSI). The Board believes that the provisions of the Exposure Draft regarding the 10-year schedule of an employer’s required contributions would provide historical context for the employer’s current-year required contribution and therefore tentatively agreed to carry forward those provisions to the final Statement.

The Board completed its redeliberations of the Exposure Draft with a discussion of effective date and transition provisions. The Board tentatively agreed that the effective date as proposed in the Exposure Draft (effective for reporting periods beginning after December 15, 2015) should be carried forward to the final Statement with a modification to encourage (rather than permit) earlier application. The Board considered a respondent request for guidance regarding the application of materiality to the transition provisions regarding “if practical” but tentatively decided that the final Statement should not include such guidance. The Board also tentatively agreed that the transition provisions as proposed in the Exposure Draft should be carried forward to the final Statement, with the addition of specific transition guidance for the 10-year schedule presented in RSI. The Board also tentatively agreed that an explanation including the notion that inconvenient should not be considered equivalent to not practical should be included in the Basis for Conclusions. Finally, the Board agreed that the term practicable should be used in place of the term practical, to more clearly convey the transition requirements.

The Board also reviewed a preballot draft of a final Statement, Accounting and Financial Reporting for Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, and provided clarifying edits on the draft document, including modification of the title of the final Statement to Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans.

Minutes of Teleconference, September 21, 2015

The Board reviewed a prospectus for a project that would consider the accounting and financial reporting requirements for pensions provided through certain multiple-employer defined benefit pension plans (for example, certain private-sector pension plans, such as Taft-Hartley plans, and plans that have similar characteristics). The Board previously decided that this issue would be in the scope of the Pension Benefit Issues project; however, based on additional stakeholder feedback, the Board decided that the issue presented in the project prospectus should be considered separately from the other issues that are in the scope of the Pension Benefit Issues project. Therefore, the Board agreed to add a separate project to the Practice Issues section of its current technical agenda to address issues related to pensions provided through certain multiple-employer defined benefit pension plans.

ACCOUNTING AND FINANCIAL REPORTING FOR PENSIONS PROVIDED THROUGH CERTAIN MULTIPLE-EMPLOYER PENSION PLANS—TENTATIVE BOARD DECISIONS TO DATE


Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, was approved in December 2015.