Accounting for benefits

GASB Preliminary Views Employers'Tool Kit
Excerpt:"[The tool kit] consists of a number of items specifically drafted (and reviewed by actuaries and others) to help employer representatives understand the basics of what GASB is proposing, and appreciate the drastic consequences if GASB's PV becomes the new accounting and disclosure standard for governmental employers. These items have been designed to simplify as best as possible the complicated issues in the PV, and focus on one of the most potentially dangerous, namely, the elimination of the'Annual Required Contribution'. . . and the inclusion of a new'Net Pension Liability,'. . . on the face of the employer's balance sheet, thereby de-linking pension accounting from pension funding."(National Council on Teacher Retirement)

[Opinion] Group Letter Stating Concerns with IASB Proposed Amendments to IAS 19 (PDF)
3 pages. The letter was sent by the American Benefits Council, the European Paritarian Institutions of Social Protection, the European Federation for Retirement Provision, and the National Coordinating Committee for Multiemployer Plans. (American Benefits Council)

[Opinion] Group Comment Letter to IASB on Proposed Amendments to IAS 19 (PDF)
8 pages. The letter was sent by the American Benefits Council, the European Paritarian Institutions of Social Protection, and the National Coordinating Committee for Multiemployer Plans. (American Benefits Council)

[Opinion] The SPARK Institute Comment Letter to FASB on Proposed Accounting Standards Update for DC Plan Loans (PDF)
2 pages. (The SPARK Institute)

[Opinion] Statement on Behalf of Profit Sharing/401k Council of America before Working Group on Employee Benefit Plan Auditing and Financial Financial Reporting Models
2 pages. (Profit Sharing / 401k Council of America)

State Pension Fund Faces Shortfall, Candidate for State Comptroller Says
Excerpt:"When the state takes its snapshot of the fund, he says, it makes several mistakes, including two big ones. First, it counts money that is not in the fund -- hoped-for investment gains that may or may not appear and future contributions from workers and taxpayers. Second, it does not take into account that the state pensions are worth more than other such promised money because they come with a constitutional guarantee."(The New York Times; free registration required)

SEC's Cease-and-Desist Order Against State of New Jersey Relating to Disclosure Regarding Pension Plan Obligations
Excerpt:"This alert focuses on lessons and concerns for state and municipal issuers arising from the Order."(Nixon Peabody LLP)

[Guidance Overview] GASB's Proposed Changes to Pension Accounting and Financial Reporting by Employers (PDF)
Pages 1, 3 of 4 pages. (National Council on Teacher Retirement)

[Guidance Overview] GASB Moving Towards Radical Overhaul of Public Pension Accounting (PDF)
12 pages. Excerpt:"'Preliminary Views'issued by GASB on pension accounting would, if adopted, represent a radical departure from past practice and bring governmental employers much closer to the FASB standards governing private employers. Public employers should anticipate that the accounting rules under consideration would have a significant impact on their balance sheet and income statements."(CHEIRON, Inc.)

FASB Proposed Accounting Standards Update Re: DC Plan Loans (PDF)
16 pages. Comments due by September 7, 2010. (FASB via The SPARK Institute)

FASB Would Drop Fair Value for Pension Plan Loans
Excerpt:"FASB [has] issued a Proposed Accounting Standards Update . . . that is intended to clarify how defined contribution pension plans should classify and measure loans to participants."(American Institute of Certified Public Accountants)

[Opinion] Truth in Pensions: Just How Big a Hole Is New Jersey In?
Excerpt:"The action was historic: New Jersey is the first state targeted by the SEC for securities fraud. But with pension funds crumbling everywhere, other states probably will join us in shame. But from this day forward, cross our hearts and hope to die, New Jersey has agreed to tell the truth about its grossly and dangerously undernourished pension funds."(New Jersey On-Line LLC)

Dodd-Frank Should Not Mean New Clawback Accounting
Excerpt:"The specific accounting ramifications of the compensation clawback provisions in the recent financial services overhaul legislation should not go beyond what has traditionally been the case for such corporate transactions. That was a key conclusion of a PricewaterhouseCoopers [report.]"(PLANSPONSOR.com)

[Guidance Overview] Accounting for Clawbacks in Stock Compensation Arrangements, Including Dodd-Frank Act Provision on Recovery of Erroneously Awarded Compensation
4 pages. Excerpt:"This Insight addresses the impact on accounting for share-based compensation awards that could be subject to the clawback provision of the Act, as well as other potential accounting implications associated with new types of clawback features companies have implemented recently."(PricewaterhouseCoopers LLP)

The Proposed International Accounting Standard for Pension Plans (PDF)
4 pages. Excerpt:"If adopted as proposed, the new accounting rule would eliminate a significant incentive for defined benefit pension plan sponsors to hold stocks in the plan trust."(Towers Watson)

Report Says Focus on Pension'Earnings'Inhibits Risk Management
Excerpt:"The report describes how current U.S. pension accounting standards cloud true economics by including a'funny money'component in pension earnings, presenting a fundamental obstacle to CFOs in pursuing rational risk management."(PLANSPONSOR.com)

Why IASB-Proposed Rules Are Important to U.S. Pension Plans
Excerpt:"Immediate recognition of gains, losses, and the effect of plan changes. Current IASB rules allow the smoothing of a plan's gains and losses, along with the effect of plan changes over the future working life of plan participants -- generally about 10 years, explained Inglis. The exposure draft would eliminate current amortization and smoothing of these items, and require their immediate recognition through OCI."(The Vanguard Group, Inc.)

FASB&IASB Propose Increased Disclosure of Multiemployer Funding Liability
Excerpt:"In order to protect the interests of multiemployer plans and their sponsoring organizations, we are forming a group of employer associations, employers, unions, industry associations, and other interested stakeholders on whose behalf we will submit comments to the FASB, IASB, and other appropriate parties."(Groom Law Group)

PricewaterhouseCoopers Issues a Study of the IASB's Proposal on Pension/OPEB Accounting
Excerpt:"PricewaterhouseCoopers (PwC) performed a study of the potential impact of the proposal, looking at 60 US and non-US companies and evaluating how their historical reported financial information would have been affected had they been applying the proposal in past years."(PricewaterhouseCoopers LLP)

Pension and OPEB Accounting: A Study of the IASB's Proposal
60 pages. Excerpt:"The International Accounting Standards Board (IASB) has proposed changes to its standard on employers'accounting for defined benefit pensions and other postretirement benefits. While the proposal is not the result of joint deliberations with the Financial Accounting Standards Board (FASB), both boards intend to eventually adopt a converged standard."(PricewaterhouseCoopers LLP)

Retirement Plan Compliance Management Is a Team Effort
Excerpt:"There are common misperceptions about the scope of services that . . . TPAs and CPAs are contracted, or even trained, to provide. That lack of understanding opens gaps in plan management (the plan sponsor's responsibility) that can lead to a myriad of compliance failures."(Chang Ruthenberg&Long PC)

FAA Proposal May Affect Disclosure of Executives'Personal Use of Company Aircraft
Excerpt:"Executives likely to have personal travel disrupted by urgent business could use corporate aircraft for such trips and reimburse their companies for this expense, under a proposed Federal Aviation Administration legal interpretation."(Mercer LLC)

How Will the New Pension Accounting Standards Affect You?
Excerpt:"The Academy's Pension Practice Council presented a webinar on July 15 about [GASB's] recently released Preliminary Views document on Pension Accounting and Financial Reporting by Employers. [You may access the webinar from the target page.]"(American Academy of Actuaries)

[Opinion] American Academy of Actuaries Comments on Harmonization of Cost Accounting Standards with PPA (PDF)
8 pages. Excerpt:"While the [Cost Accounting Standard] Board may philosophically disagree with the use of settlement liabilities similar to those applied under PPA to determine government contracting pension costs for an ongoing plan, it is nevertheless congressionally mandated as the required funding approach for pension plans and is inextricably linked to CAS costs through the requirement that cost accounting standards harmonize with the PPA funding rules."(American Academy of Actuaries)

[Opinion] Discount Nation's Public Pension Plans by 3.5 Percent and the Unfunded Liability Rises from $452 Billion to $2.9 Trillion
Excerpt:"Government pension plans across the nation assume they will make between 7 percent and 8.50 percent, with the median for 126 plans surveyed being 8 percent . . . . Moving to the lower investment assumptions of corporate accounting would force taxpayers to come up with $2.9 trillion to bridge the gap between assets and liabilities."(Bloomberg L.P.)

[Guidance Overview] GASB's Preliminary Views on Pension Accounting and Financial Reporting by Employers (PDF)
8 pages. Excerpt:"The proposed changes may play a significant role in shaping state and local government pensions and other postemployment benefits for decades."(Gabriel Roeder Smith&Company)

States May Face Pension Pressure as New GASB Rules Widen Gaps
Excerpt:"The proposed accounting revisions, which are subject to comment through October, come as states are reporting widening pension liabilities following declines in asset values in the year through June 2009. Wilshire Associates, based in Santa Monica, California, has estimated the median investment loss at 17 percent that year."(Bloomberg Businessweek)

[Guidance Overview] GASB Preliminary Views on Proposed Changes to Pension Accounting Standards for Public Sector Employers
Excerpt:"[One implication, for example, is that] the proposed change in how investment earnings are recognized will create less expense volatility in some situations and greater expense volatility in others."(The Segal Group, Inc.)

[Guidance Overview] GASB's Preliminary Views on Pension Accounting and Financial Reporting by Governmental Employers (PDF)
Excerpt:"BUCK COMMENT. The direction of GASB???s thinking is clearly toward a standard that would lead many governmental entities to make separate valuations of their pension plans for accounting and funding purposes, which is not presently a common practice in the public sector. Actuarial firms serving public-sector entities are likely to be pressed by their clients to look for economies of scale in the preparation of the separate valuations."(Buck Consultants)

International Accounting Standards Board Answers Questions on Proposed Changes to Accounting for Retirement Plans
Excerpt:"The IASB has published answers to frequently asked questions [on its proposed changes to employers??? accounting for defined benefit pension and retiree medical plans covering] the project???s scope, relationship to other IASB and FASB activities, key elements, transition and effective date."(Mercer LLC)

A New Plan for Valuing Pensions
Excerpt:"The rule makers want to shine a bright light on the states and local governments that routinely fail to put enough money into their pensions ??'places like Illinois, New Jersey and Pennsylvania ??'that year after year contribute less than their actuaries tell them they have to contribute to their pension funds."(The New York Times; free registration required)

International Accounting Standards Board Frequently Asked Questions on Defined Benefit Pension Plan Accounting (PDF)
7 pages. (American Benefits Council)

[Opinion] It Is Important to Convince Policymakers of the Difference Between Tax Deferred Expenditures and Tax-Free Exclusions
Excerpt:"Unfortunately, cash flow accounting does not account for the taxable withdrawals during the withdrawal phase of an individual's retirement plan life cycle. As a result, the true revenue loss of the employer-sponsored retirement system relative to other revenue or outlay proposals is significantly overstated."(Profit Sharing / 401k Council of America)

Valuing Liabilities in State and Local Pension Plans (PDF)
12 pages. Excerpt:"The conclusion is that whereas using a riskless rate instead of the assumed return on assets produces a very high measure of public pension liabilities, such a change does not have immediate implications for funding or investment. And adopting a riskless rate has clear advantages: it would accurately reflect the guaranteed nature of public sector benefits; it would increase the credibility of public sectoraccounting with private sector analysts; and it could well forestall unwise benefit increases when the stock market soars."(Center for State and Local Government Excellence)

[Opinion] 8% As the Projected Annual Rate of Return on Assets of a Pension Fund Is Too High
Excerpt:"We've got to start using more credible numbers in booking public pension liabilities. . . . Coming up with a more credible pension liability number is an absolutely necessary first step toward doing the hard work of figuring how either to pay for these benefits or to start cutting them."(PLANSPONSOR.com)

2009 Public Pension Finance Symposium
This monograph contains papers from the Symposium on a range of views on the measurement of pension liabilities and risk management issues related to public sector pension plans. The papers and comments presented in this monograph showcase many of the differing views with regard to measuring public pension plan liabilities. (Society of Actuaries)

[Guidance Overview] 2009 Plan Financial Statements Require New Plan Asset Disclosures
5 pages. Excerpt:"The new valuation provisions were required to be applied to all Employee Benefit Plan assets in the employer's financial statements and those same values should be consistently applied in the Employee Benefit Plan's financial statements. The new required disclosures were not required in employers'2009 year-end Employee Benefit Plan asset disclosures. However, the 2009 Plan financial statements should reflect both the valuation techniques and the extensive disclosures required by the new standards."(PricewaterhouseCoopers LLP)

GASB Reaffirms in General the Use of Expected Long-Term Return on Investments As Basis for Valuing Public Pension Plan Liabilities
Excerpt:"The continued use of the traditional valuation method would apply to plans so long as the assets available for benefits are projected to be sufficient to cover future benefits."(Pensions&Investments)

[Official Guidance] Text of'Plain Language Supplement'of GASB's Preliminary Views on Reporting and Accounting for Pension Obligations
19 pages. Excerpt:"This document is a plain-language supplement to the Preliminary Views, Pension Accounting and Financial Reporting by Employers, issued by the Governmental Accounting Standards Board. This supplement is prepared for citizens, taxpayers, elected representatives, municipal analysts, and other external users of governmental financial information and contains a minimum of technical terminology. The supplement references the Preliminary Views and should be read in conjunction with it."(Governmental Accounting Standards Board)

[Official Guidance] Text of Governmental Accounting Standards Board's'Preliminary Views'on Reporting and Accounting for Pension Obligations
51 pages. Excerpt:"The objective of this Preliminary Views is to present the Board's current views on what it believes are the most fundamental issues related to employer recognition and measurement of pensions in order to obtain comments from constituents before developing more detailed proposals for changes to existing standards. The views put forth in the chapters that follow generally are discussed as principles or concepts rather than as detailed potential requirements."(Governmental Accounting Standards Board)

Mercer's Annual Retirement Benchmarking Survey Report, 2010
Excerpt:"For the first time, this report is being presented in an interactive electronic flipbook that puts the details ? for all the companies in the S&P 1500 ? right at your fingertips. This report provides a comprehensive review of retirement plan benchmark data from a broad range of perspectives and financial effects."(Mercer LLC)

Public Pension Funds Could Be in for Big Shock Under Proposed Accounting Reforms
Excerpt:"The Government Accounting Standards Board is preparing to release a document that could send shivers through public pension systems and the taxpayers who fund them. The document, tagged a preliminary view of proposed pension accounting reforms, is scheduled for release this week. Statements on the board's website suggest coming disclosure standards that could ramp up the need for higher contributions to keep public pension funds on a stable footing."(Pittsburgh Tribune-Review)

How Would Pension Accounting Change if the U.S. Decides to Follow the International Accounting Standards Board's Requirements? (PDF)
4 pages. Excerpt:"This Spotlight considers how the general concepts of pension accounting in the U.S. would change if IAS 19, including the proposed amendments in the exposure draft, were to become the standard in the U.S. It is not intended as a summary of the exposure draft, or as a comparison between the current and proposed provisions of IAS 19."(The Segal Group, Inc.)

Disclosure of Participation in Multiemployer Pension Plans on Financial Statements
Excerpt:"The FASB board had directed the staff to begin drafting a proposed Accounting Standards Update. The staff expects to issue the proposed Update in the second quarter of 2010 and a final Update early in the fourth quarter of 2010. This will leave little time for employers to transition to the new rules when they are finalized. Therefore, an employer that participates in one or more multiemployer plans should start to gather the multiemployer plan information it may need to disclose on its 2010 year-end financial statements."(Dorsey&Whitney LLP)

International Accounting Standards Board Proposes Substantial Changes in Disclosures for Employers Contributing to Multiemployer Plans
Excerpt:"Looking even further down the road, all U.S. employers contributing to multiemployer plans might be interested because it is possible that these changes in international accounting standards foretell future changes in U.S. standards for domestic employers."(The Segal Group, Inc.)

GASB Has Big Changes in Mind for the Accounting Rules Pension Plans Use
Excerpt:"The Governmental Accounting Standards Board (GASB) is preparing to release officially its Preliminary Views on its controversial pension accounting project in June. A current posting on its website with recent minutes tells us to expect some big changes with huge financial impact, if their current thinking works its way ultimately into the accounting standards."(Governing)

Defined Benefit Pension and Other Postretirement Benefits'Accounting: An Analysis of IASB's Exposure Draft
6 pages. Excerpt:"As previously mentioned, the FASB also has a project on its agenda to comprehensively reconsider employers'accounting for pensions and OPEB. That project will reconsider the deferred recognition techniques allowed under U.S. GAAP. Although the FASB appears to be waiting for the outcome of the IASB's project, it has acknowledged that its ultimate goal is convergence with the IASB's standard."(PricewaterhouseCoopers LLP)

FASB Begins Project on Disclosures of Employer Involvement in Multiemployer Plans
Excerpt:"According to the FASB, the objective of this project is to enhance the disclosure requirements about an employer's participation in a multiemployer plan under FASB Accounting Standards Codification Subtopic 715-80 (originally issued as FASB Statements No. 87, Employer's Accounting for Pensions, No. 106, Employers'Accounting for Postretirement Benefits Other Than Pensions, and No. 132 (revised 2003), Employers'Disclosures about Pensions and Other Postretirement Benefits)."(Wolters Kluwer)

[Guidance Overview] IASB Proposed Changes to Accounting for Employers'Defined Benefit Plans (PDF)
Excerpt:"BUCK COMMENT. Companies reporting under U.S. GAAP will be anxiously awaiting FASB's reaction to the [Exposure Draft]. If the proposed amendments to IAS 19 were adopted by IASB, there would be basic convergence on recognition on the balance sheet of the net funded status of defined benefit plans and the cost of such plans recognized in the statement of total comprehensive income."(Buck Consultants)

IASB Proposes Changes to Employers'Accounting for Pension and Retiree Medical Plans
Excerpt:"International accounting standards [for defined benefit] pension and retiree medical plans would change significantly under a new IASB proposal. These changes, which dovetail with an IASB project on financial statement presentation, would move both the upside and downside of risks taken by DB plans outside of profit and loss accounts and into other comprehensive income."(Mercer LLC)

The IASB's Proposed Rules for Pension Accounting Could Dampen the Effect of Asset Gains and Losses on the Bottom Line
Excerpt:"The International Accounting Standards Board's long-awaited exposure draft on IAS 19, the standard that governs pension accounting, may turn out to be good news for companies. In a reversal of the proposals that were originally floated, under the exposure draft the impact of asset gains and losses would be reflected in other comprehensive income (OCI) rather than in profits and losses, lessening their impact on a company's earnings."(CFO.com)

IASB Issues Exposure Draft Proposing Major Changes to Pension/OPEB Accounting
Excerpt:"The IASB proposal would significantly change an employer's recognition of its defined benefit obligations and costs. . . . This [article] provides a high-level overview of the [exposure draft]."(PriceWaterhouseCoopers)

Concordance Mapping Provisions of Exposure Draft to Current Requirements in IAS 19 (PDF)
2 pages. Excerpt:"This table shows the effect of the proposals in this exposure draft on the requirements in IAS 19."(International Accounting Standards Board via American Benefits Council)

Executive Summary of IASB Exposure Draft: Defined Benefit Plans -- Proposed Amendments to IAS 19 (PDF)
12 pages. Excerpt:"Investors, analysts and others need relevant information about those items that is easy to understand and permits comparison between companies. However, the accounting for those items under the current standard, IAS 19 Employee Benefits, is complex and needs a comprehensive review. This project aims to address the following deficiencies in IAS 19: . . ."(International Accounting Standards Board via American Benefits Council)

IASB Exposure Draft: Defined Benefit Plans -- Proposed Amendments to IAS 19 (PDF)
92 pages. Excerpt:"The Board's objective is to finalise, by the middle of 2011, short-term, targeted improvements to the accounting for defined benefit plans."(International Accounting Standards Board via American Benefits Council)

New IASB Proposal Could Increase Scrutiny of Risks Taken by DB Plans
Excerpt:"The proposed changes to international accounting standards (IAS 19) could encourage greater scrutiny of the risks taken by defined benefit plans and the way in which these risks are rewarded . . . ."(PLANSPONSOR)

[Guidance Overview] IASB Proposes Changes to IAS 19 ? As the Accounting for Retirement Plans Evolve
Excerpt:"In a further step in the evolution of the accounting for retirement benefits, the International Accounting Standards Board (IASB) has issued its long-awaited Exposure Draft (ED) of proposed changes to IAS 19, Employee Benefits."(Towers Watson)

FASB Proposal Regarding Multiemployer Defined Benefit Plans
Excerpt:"On April 14, 2010, the Financial Accounting Standards Board (FASB), which has authority to modify GAAP, had a public meeting at which it tentatively decided to require employers contributing to multiemployer defined benefit pension plans to disclose in their notes to their financial statements further quantitative and qualitative information about their participation in such plans."(Proskauer Rose)

Financial Reporting Implications of Health Care Legislation
5 pages. Excerpt:"This [article] describes a number of potentialimplications of the new legislation for an employer's accounting for postretirement benefits other than pensions. . . . Although it can be challenging, employers are required to estimate the impact of the Act on their [accumulated postretirement benefit obligation]."(PriceWaterhouseCoopers)

Case Study: Planning for a Plan Termination
Excerpt:"A manufacturing company froze its defined benefit pension plan in 2005, but the plan did not have enough assets to terminate. In late 2009, the firm received some good news: It was sitting on a sizeable amount of cash, and its accountants informed it that for a variety of financial reasons it would be advantageous to make a large, deductible contribution to the pension plan. But the company's Milliman actuary gave it some bad news: The large contribution it could afford would not be quite enough to terminate the plan right away. The favorable financial situation would not last beyond early 2010, so how could the firm best take advantage of the opportunity to fund up its pension plan?"(Milliman)