Short-Term Project Aims to Enhance Governmental Pension Plan Disclosure

The Governmental Accounting Standards Board (GASB) has added a project intending to bring current governmental pension disclosure requirements in line with those of other post-employment benefits (OPEB) to its current technical agenda. The project, which is expected to be completed expeditiously, is likely to require state and local governments to provide enhanced disclosures and supplementary information about their pension plans to users of governmental financial statements.


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Disclosure requirements previously adopted by the Board in regard to OPEB that potentially would be required for pensions as a result of as GASB's short-term project include:

  1. Disclosure of the current funded status of the plan as of the most recent actuarial valuation date in the notes to the financial statements of pension plans and certain employers.
  2. Note disclosure of funded status and a multi-year schedule of funding progress using the entry age actuarial cost method as a surrogate when the aggregate actuarial cost method has been used to determine annual required contributions and annual pension cost.
  3. Additional note disclosures about actuarial methods and assumptions used in valuations on which reported information about the annual required contribution (ARC) and funded status of the plan is based.
  4. Disclosure by cost-sharing employees of how the contractually required contribution rate is determined.
  5. Presentation of the required schedules for a cost-sharing plan in which an employer participates in the employer's report, if the plan does not issue a GAAP-compliant report that includes required supplementary information (RSI) or the plan is not included in the financial report of another entity.

A formal exposure draft on this initiative is expected before the end of 2007.

Separately, the GASB is conducting a concurrent research project to determine the effectiveness of existing governmental accounting standards related to pensions. The Board will determine the need for future changes to the current standards for pensions based on constituent feedback received as part of the research.

"Both of these projects reflect the GASB's commitment to help ensure that users of governmental financial statements have access to the highest quality information available to make their decisions," said Robert Attmore, GASB Chairman. "While accounting standards do not and cannot require funding of such pension plans, the information they provide enhances constituent knowledge about how well these obligations are being met. Our short-term project intends to address certain shortfalls in pension disclosures that were first identified during the development of the OPEB standards, while our pension research project will better enable us to properly determine if even greater steps need to be taken."

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