FASB Close to New Pension Reporting Rule

Companies will be required to report their pension assets and investment strategies under a new rule being considered by the Financial Accounting Standards Board (FASB).

One major change is that companies will be required to describe their pension holdings — reporting on the proportion of stocks, bonds, real estate, private equity and other investments, the FASB decided last Wednesday. Companies have not previously revealed details about the types of assets held in their retirement plans.

The board also agreed that companies will have to describe their investment strategy for their pension assets, for example their policy on derivatives, Reuters reported.

Companies will also be required to disclose how much they expect to pay out to employees for each of the next five years, as well as total expected payments for the following five years.

The decision on reporting benefit payments came after board members debated whether the companies themselves should decide how to disclose the information on financial statements.

Much of the reporting will begin this year, but companies will have until 2004 to report estimated benefit payments and total assets in retirement plans of their foreign divisions. Some pension information will have to be reported on a quarterly basis.

The FASB's Nov. 26 meeting was set to be the last one before it issues a final standard to improve disclosure on corporate pension plans. However, Peter Proestakes, FASB's pension project manager, may ask the board to hold one more meeting before making a final decision later this year.

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