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GASB Addresses Practice Issues with Pension Standards

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Apr 12th 2016
Staff Writer and Editor AccountingWEB
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New guidance issued by the Governmental Accounting Standards Board (GASB) on April 11 addresses practice issues that arose during implementation of the board’s pension accounting and financial reporting standards for state and local governments.

GASB Statement No. 82, Pension Issues, clarifies or amends related areas of three existing standards:

  • Statement No. 67, Financial Reporting for Pension Plans
  • Statement No. 68, Accounting and Financial Reporting for Pensions
  • Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68

The specific practice issues Statement No. 82 addresses are:

  • Presentation of payroll-related measures in required supplementary information.
  • Selection of assumptions and the treatment of deviations from guidance in Actuarial Standards of Practice for financial reporting purposes.
  • Classification of payments made by employers to satisfy plan member contribution requirements.

Here’s what changed:

Presentation of payroll-related measures in required supplementary information. The new guidance amends Statement No. 67 and Statement No. 68 to require the presentation of covered payroll, defined as the payroll on which contributions to a pension plan are based, and ratios that use that measure. Statement No. 67 and Statement No. 68 previously required presentation of covered-employee payroll, which is the payroll of employees who are provided with pensions through the pension plan, and ratios that use that measure in schedules of required supplementary information.

Selection of assumptions. The new guidance clarifies that a deviation, as the term is used in Actuarial Standards of Practice issued by the Actuarial Standards Board, from the guidance in an Actuarial Standard of Practice is not considered to conform with the requirements of Statement No. 67, Statement No. 68, or Statement No. 73 for the selection of assumptions used in determining the total pension liability and related measures.

Classification of employer-paid member contributions. The new guidance clarifies that payments made by an employer to satisfy contribution requirements that are identified by the pension plan terms as “plan member contribution requirements” should be classified as “plan member contributions” for purposes of Statement No. 67 and as “employee contributions” for purposes of Statement No. 68. It also states that an employer’s expense and expenditures for those amounts should be recognized in the period for which the contribution is assessed and classified in the same manner as the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits).

The requirements of Statement No. 82 are generally effective for reporting periods beginning after June 15, 2016, with earlier application encouraged. Additional information regarding implementation timing is available in the document.

Related articles:

GASB’s New Pension Standards Now Available
GASB Issues New Standards on Retiree Benefits Reporting

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